If you’ve ever dabbled in shares, crypto, managed funds or property, you’ve likely heard the phrase “cost basis” tossed around. In 2025, understanding your cost basis is more important than ever for Australian investors. Whether you’re tracking capital gains, optimising tax, or planning a future sale, your cost basis is the backbone of smart investment decisions.
What Is Cost Basis—And Why Should You Care?
Cost basis is the original value of an asset for tax purposes, usually the amount you paid to acquire it. When you sell, the difference between the sale price and your cost basis determines your capital gain (or loss), which the ATO uses to calculate your tax bill. Get it wrong, and you could pay more tax than necessary—or raise red flags with the tax office.
- Shares: The cost basis is usually the purchase price plus any brokerage fees.
- Property: It’s what you paid, plus eligible legal and stamp duty costs, and certain capital improvements.
- Cryptocurrency: The ATO treats each coin as a separate asset, so you’ll need to track the cost basis for each purchase or swap.
The 2025 tax year brings sharper ATO scrutiny of digital assets and new reporting standards for brokers, making accurate cost basis reporting non-negotiable.
2025 Policy Updates: What’s Changed for Australian Investors?
This year, several policy tweaks have put the spotlight on cost basis tracking:
- Single Touch Capital Gains Reporting: From July 2025, major share trading platforms must report transaction data directly to the ATO. This makes accurate cost basis records more critical—and makes it easier for the ATO to spot errors.
- Crypto Data Matching: The ATO now cross-checks crypto exchange data with individual tax returns. If your cost basis calculations are off, it’s much more likely to trigger an audit.
- Changes to Property Records: Land title offices in several states are now sharing purchase and sale data with the ATO in near real-time, tightening the net on under-reported gains.
These changes mean investors can no longer rely on guesswork or outdated spreadsheets. Digital record-keeping—and knowing how to calculate cost basis correctly—has never been more crucial.
Practical Strategies: How to Calculate (and Optimise) Your Cost Basis
Let’s break down how to get your cost basis right, and how to use it to your advantage:
- Track Every Transaction: For shares and ETFs, keep detailed records of every purchase—including dividend reinvestments, splits, and DRPs. For crypto, log every buy, sell, swap, and transfer.
- Include All Eligible Costs: Don’t forget brokerage, stamp duty, transfer fees, and improvement costs (for property). These can all be added to your cost basis, reducing your capital gains.
- Use the Right Accounting Method: In Australia, the default is First In, First Out (FIFO), but investors may choose Specific Identification if they have robust records. This can allow you to strategically sell higher-cost parcels first, reducing taxable gains.
- Leverage Tax-Loss Harvesting: By understanding your cost basis, you can identify assets with a loss and sell them to offset gains elsewhere—lowering your overall tax bill.
Real-world example: Sarah bought 100 CBA shares in 2022 for $100 each, and another 50 for $120 in 2024. In 2025, she sells 50 shares for $130 each. Using FIFO, the cost basis for those 50 shares is $100 each—so her capital gain is $30 per share, not $10.
Cost Basis Pitfalls: What to Watch Out For
Some of the most common (and costly) mistakes Australian investors make with cost basis include:
- Not including all eligible acquisition or improvement costs (missing out on tax savings)
- Mixing up parcels from DRPs or share splits
- Forgetting to update records after asset transfers or inheritance
- Assuming crypto transactions are “invisible”—the ATO’s data-matching programs say otherwise
With 2025’s stronger ATO technology, these errors are easier than ever for tax authorities to spot. It pays to be meticulous.
Conclusion: Nail Your Cost Basis, Reap the Rewards
Whether you’re a seasoned investor or just getting started, understanding and tracking your cost basis is non-negotiable in 2025. With new tax rules, smarter ATO technology, and tighter reporting standards, there’s never been a better time to review your records and make sure your cost basis is rock-solid. Your future self—and your tax bill—will thank you.
