The five elements
Section 110-25 of the ITAA 1997 sets out five elements. They are cumulative: the cost base is their sum.
Where the valuation fits
Element 1 is a factual figure when the property was bought on the open market: the contract price. It becomes a valuation question whenever the law substitutes or deems market value — a transfer between related parties, an inheritance of a pre-CGT asset, or a former home first used to produce income under s118-192.
Element 4 can also require valuation input on complex properties, where an apportionment between land and improvements, or between capital and repair expenditure, is contested.
What cannot go in
Every one of these has been argued to us by a client at some point, and none of them holds.
Cost base, reduced cost base, and indexation
Where the asset is sold at a loss, the reduced cost base applies instead. It excludes element 3 entirely and is adjusted for amounts such as claimed capital works deductions. For assets acquired before 21 September 1999 there is also a choice between the indexation method and the CGT discount — a choice for your accountant, though it affects which cost base figure matters.
None of this changes the valuation. A valuation gives market value at a date; how that figure is used in the calculation is a tax question. But it does explain why your accountant sometimes needs more than one date, or a split between land and improvements.