CGT: consideration and cost base paper

Published on 12 Oct 07 by VICTORIAN DIVISION, THE TAX INSTITUTE

Calculation of consideration and cost base for CGT purposes can be made complicated by post completion and other events. The impact of different events is examined in this paper including:

• is the cost base fixed by the requirement to pay under the contract or can it change? For example, cost base adjustments for post-completion events
• how is cost base affected by set-off or forgiveness of liability to pay?
• CGT treatment of contingent and unascertainable amounts (eg earn-outs) for both consideration and cost base purposes
• is consideration under a contract ever fixed? What if there is known exposure to a warranty claim when the contract is signed?
• are legal costs related to opposing an indemnity claim part of the seller’s cost base?

Author profiles

Sue Williamson CTA-Life

Sue is a partner at EY specialising in tax controversy. Sue has worked in tax for more than 25 years, including roles in major law firms and executive roles within the firms in which she has been a partner. Sue was the President of The Tax Institute in 2008, has been a member of several advisory boards, has participated in many consultative forums and lectures in the University of Melbourne Masters of Law program. Sue was a member of the instructing solicitor team working on the Placer Dome litigation. - Current at 26 June 2019

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Melanie Baker CTA

Melanie is a barrister who specialises in tax and administrative law. Before joining the Victorian Bar in 2010, Melanie was a Senior Associate in the Tax group of Allens Arthur Robinson. As a barrister, Melanie regularly advises, and appears on behalf of, taxpayers and the Commissioner of Taxation. Melanie is also a Senior Fellow of the University of Melbourne where she co-lectures the post-graduate law subject, ‘Tax Litigation’. - Current at 08 November 2019

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