Document ID: chunk:federal_register_of_legislation:C2004C00958:clause:10_4:p1
Version: federal_register_of_legislation:C2004C00958
Segment Type: clause
Provision Reference: sch 10 cl 4 (pt 1/2)
Character Range: 952398–955072

4                                            Capital gains—Goodwill                         Subdivision 118‑C

Note: There are provisions of the Income Tax Assessment Act 1936 dealing with indexation that have not yet been rewritten.

Operative provisions

960‑270  Indexing amounts

 (1) Some provisions of this Act require amounts to be indexed. You index an amount by multiplying it by its *indexation factor.

 (2) You do not index the amount if its *indexation factor is 1 or less.

960‑275  Indexation factor

 (1) For indexation of amounts on an annual basis, the indexation factor is:

Example: The business exemption threshold is an amount that is indexed on an annual basis: see section 118‑260.

 (2) For indexation of the *cost base of a *CGT asset (except the first element of the cost base of an asset covered by subsection (3)), the indexation factor for expenditure in an element of the cost base is:

Note 1: This rule applies even if you do not actually pay some of the expenditure until a later time (for example, under a contract to purchase an asset by instalments).

Note 2: There are rules affecting when the expenditure was incurred: see sections 114‑15 and 114‑20.

 (3) For indexation of the first element of the *cost base of a *CGT asset that is:

 (a) a *share in a company that was issued or allotted by the company; or

 (b) a unit in a unit trust that was issued by the trustee of the unit trust;

the indexation factor for an amount in the first element of the *cost base of the asset that was paid at a time after it was issued or allotted is:

The payment can include giving property: see section 103‑5.

Example: A company issues shares to you. You acquire the shares in circumstances that did not involve a CGT event. If the shares are partly‑paid and the company later makes a call on the shares, you use the index number for the quarter in which you paid that later payment.

Note: This subsection does not apply to shares or units you acquired before 16 August 1989: see section 960‑275 of the Income Tax (Transitional Provisions) Act 1997.

 (4) However, you cannot index expenditure in the third element of the *cost base of a CGT asset (non‑capital costs of ownership).

 (5) You work out the *indexation factor to 3 decimal places (rounding up if the fourth decimal place is 5 or more).

Example: If the factor is 1.102795, it would be rounded up to 1.103.

960‑280  Index number

 (1) In most cases, the index number for a quarter is the All Groups Consumer Price Index number (being the weighted average of the 8 capital cities) first published by the Australian Statistician for the quarter.

 (2) For