If you’re an Australian investor or property owner, knowing the ins and outs of your asset’s ‘unadjusted basis’ could mean the difference between a smooth tax return and an unexpected bill from the ATO. As financial regulations tighten and reporting standards evolve in 2025, understanding this foundational concept is more crucial than ever.
What Is Unadjusted Basis—and Why Does It Matter?
The ‘unadjusted basis’ of an asset is its original cost before taking into account any subsequent adjustments like depreciation, capital improvements, or deductions. In simple terms, it’s what you initially paid for the asset, plus certain acquisition costs. For most Australians, this comes into play when calculating capital gains tax (CGT) on property, shares, or business assets.
- Example: If you bought a rental property in Brisbane for $750,000 in 2021 (including legal fees and stamp duty), your unadjusted basis is $750,000.
- Why it matters in 2025: With the ATO increasing data-matching programs this year, accurately reporting your asset basis can help you avoid compliance issues and penalties.
Recent Policy Updates: How 2025 Is Shaping Asset Basis Calculations
Several regulatory changes in 2025 have sharpened the focus on basis calculations:
- ATO Digital Asset Reporting: The ATO now receives more detailed transactional data from banks and brokers, especially for property and cryptocurrency trades. Any errors in basis reporting can be quickly flagged.
- CGT Discount Rules: While the 50% CGT discount still applies to assets held for 12+ months, recent proposals to tighten eligibility criteria mean that your unadjusted basis must be well documented to claim the full discount.
- Instant Asset Write-Off Changes: For small businesses, the $20,000 instant asset write-off has been extended, but the initial purchase price (unadjusted basis) is critical in determining eligibility.
Staying updated with these policies can save you both time and money when preparing your 2025 return.
Common Scenarios: Where Unadjusted Basis Impacts Your Bottom Line
The concept isn’t just for accountants—it affects everyday investors and business owners. Here are a few scenarios:
- Property Sales: When you sell an investment property, you start with your unadjusted basis to calculate your capital gain or loss. Forgetting to include initial costs (like legal fees) can artificially inflate your taxable gain.
- Share Investments: For shares bought over multiple tranches, each purchase’s unadjusted basis must be tracked to accurately report CGT when you sell.
- Business Equipment: If you purchase machinery, your depreciation schedules and any eventual asset sale calculations rely on the correct unadjusted basis.
- Crypto Transactions: With cryptocurrency, every buy has its own unadjusted basis, and 2025’s reporting standards require meticulous record-keeping.
Best Practices for Tracking and Reporting Your Unadjusted Basis
To avoid headaches at tax time and ensure compliance, consider these strategies:
- Keep Complete Records: Store contracts, invoices, and settlement statements for all asset purchases.
- Use Digital Tools: Leverage property or investment management software that tracks acquisition costs and calculates basis automatically.
- Regular Reviews: Schedule an annual check-in to ensure your basis records match your current holdings, especially after making improvements or receiving corporate actions (like share splits).
The Bottom Line: Unadjusted Basis Is the Foundation of Smarter Investing
Whether you’re a first-time investor or running a growing business, understanding unadjusted basis gives you a firmer grip on your tax obligations and investment returns. With the ATO’s enhanced scrutiny in 2025, accurate basis tracking isn’t just good practice—it’s essential. By staying on top of your records and understanding the rules, you’ll make tax time a breeze and keep more of your gains where they belong: in your pocket.
