Sep 12, 2025 RDL Financial Planning

Why Keeping Cost Base Records for Shareholdings Is Crucial

When it comes to managing investments, particularly shares, accurate record-keeping is not just good practice—it’s essential for tax compliance and financial clarity. One of the most important aspects of this is maintaining detailed records of your cost base for each shareholding.

What Is the Cost Base?

The cost base of a shareholding includes the original purchase price plus any associated costs such as brokerage fees, and may also include adjustments for events like capital returns, share splits, or reinvested dividends. This figure is critical when calculating Capital Gains Tax (CGT) upon the sale of shares.

ATO Prefill Reports: What They Include

The Australian Taxation Office (ATO) provides prefill data to help streamline tax returns. For shareholdings, this typically includes:

• Dividend income (including franking credits)
• Tax file number (TFN) withholding amounts
• Some managed fund distributions

While this information is helpful, it does not include your cost base or capital gains/losses from share sales.

What Clients Must Retain Themselves

To accurately calculate CGT, clients must keep their own records of:

• Purchase dates and prices of shares
• Brokerage and transaction costs
• Corporate actions (e.g., share splits, mergers, demergers)
• Dividend reinvestment plan (DRP) details
• Records of any capital returns or adjustments

The absence of these records could result in delays and complications when completing your tax returns.

Why It Matters

Failing to maintain accurate cost base records can lead to:

• Incorrect CGT calculations
• Missed deductions
• Potential ATO scrutiny or penalties
• Increased cost of preparing income tax returns

By keeping thorough records from the outset, you ensure smoother tax reporting and better financial outcomes.

How an Investment Platform Can Help

Using a reputable investment platform can significantly ease the burden of record-keeping. These platforms:

• Track and store transaction history, including purchase prices and brokerage fees
• Automatically adjust for corporate actions like splits and consolidations
• Generate CGT reports that summarise gains and losses
• Consolidate dividends paid and dividends reinvested information in one place
• Provide downloadable tax reports to assist with your annual tax return

By leveraging these features, investors can reduce the risk of missing key information and ensure their tax reporting is accurate and efficient.

How a Financial Planner Can Help

A qualified financial planner plays a vital role in helping clients manage their shareholdings and tax obligations. They can:

• Review and organise your investment records to ensure your cost base is accurate and complete
• Identify missing information and help you reconstruct historical data where needed
• Liaise with platforms, brokers, and accountants to streamline reporting and compliance
• Provide strategic CGT advice, such as timing asset sales, to minimise tax or offsetting gains with losses
• Educate you on best practices for record-keeping and using investment platforms effectively

With guidance from your RDL financial planner, you can feel confident that your investment records are in order and your tax outcomes are optimised.