Div 43 and Div 40 claimed reduces cost base for any property first rented before 14/05/1997.

 Author: KaraATO(Community Support)Community Support

2 Sept 2025

Hi @saint65,

When speaking about Div 43 of the ITAA 1997, you don't have to reduce cost base by Div 43 of neither initial building nor subsequent capital works, if asset was acquired before 13 May 1997 and there were any capital works expenses incurred before 30 June 1999.

Capital works expenses you can claim as deductions against income can't be included in either:

• the cost base of an asset (including a structure or other capital improvement treated as a separate asset for capital gains tax purposes)
• the reduced cost base of an asset.

There are 2 exceptions to this rule:

• You acquired the asset before 7:30 pm (ACT time) on 13 May 1997 and incurred the capital works expense by 30 June 1999 – see the Guide to capital gains tax for more information.
• You were unable to claim a deduction because you didn't know the full amount or exact nature of the construction expense – you can include the expense in your cost base or reduced cost base.

Given the complexity it would be best to reach out to the tailored technical assistance area regarding Div 40 of the ITAA and making sure the above applies to you.

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