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

Melanie Baker KC CTA

Melanie Baker KC, CTA, is a Barrister at the Victorian Bar who specialises in tax and administrative law. As a barrister, Melanie regularly advises, and appears on behalf of, taxpayers and the Commissioner of Taxation. In recent years, she appeared in the transfer pricing case Glencore and the anti-avoidance cases, BBlood Enterprises and Minerva. Melanie is also a Senior Fellow of the University of Melbourne where she co-lectures the post-graduate law subject, ‘Tax Litigation’. - Current at 09 August 2023

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Sue Williamson CTA-Life

Sue Williamson, CTA (Life) leads the Holding Redlich Melbourne Tax Risk Management and Disputes practice. She advises clients on tax risk management including tax governance and ensuring that clients have sufficient evidence to defend their positions. She has acted in various AAT, Federal Court, High Court and Supreme Court tax cases. Sue is also an accredited mediator and has assisted clients in resolving disputes using various ADR mechanisms. 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. - Current at 04 July 2023

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