Capital gains tax (CGT) is the tax you pay on the profit you make when you sell an asset for more than it cost you. It is one of the most misunderstood parts of the Australian tax system — partly because “capital gains tax” sounds like a separate tax with its own rate, when in fact it is not. A net capital gain is simply added to your other income and taxed at your marginal tax rate. Understanding how CGT is triggered, how the gain is worked out, and which concessions apply can make a meaningful difference to what you keep after selling shares, property or other investments.
Try it: estimate the tax on a sale with the free Capital Gains Tax Calculator.
This is the pillar guide to CGT in Australia. It explains the fundamentals, then points you to detailed guides on shares, property, the main residence, inherited assets, super, capital losses and more.
CGT is part of your income tax, not a separate tax
There is no separate “CGT rate” in Australia. When you dispose of an asset, you calculate your capital gain, apply any discount you are entitled to, offset any capital losses, and add the resulting net capital gain to your assessable income for the year. It is then taxed at your marginal tax rate along with your salary, business income and everything else.
This has a few important consequences:
- The tax you pay on a gain depends on your total income in the year you sell, not the year you bought.
- A large one-off gain can push part of your income into a higher bracket for that year.
- If you have little other income in the year of sale (for example, a gap year, parental leave or the first year of retirement), the same gain can be taxed much more lightly.
Because the rate that applies is simply your marginal tax rate, we do not quote bracket figures here — check the current income tax rates and thresholds at ato.gov.au, as they change from year to year.
CGT events: what actually triggers the tax
CGT is triggered by a “CGT event” — most commonly the disposal of an asset (CGT event A1). Disposal usually means selling, but it can also include giving an asset away, transferring it to someone else, or an asset being lost or destroyed. The date of the CGT event is normally the date of the contract, not the settlement date — which matters for property and for deciding which financial year a gain falls into.
Assets that are commonly subject to CGT include:
- Shares, ETFs and managed fund units
- Investment property and land
- Crypto assets (each swap or sale is a CGT event)
- Business assets and goodwill
- Collectables and personal use assets above certain value thresholds
Some things are exempt or excluded — most notably your main residence (in most cases), your car, and assets acquired before 20 September 1985 (pre-CGT assets).
Cost base: getting your starting figure right
Your capital gain is broadly the capital proceeds (what you received) minus the cost base (what the asset really cost you). Getting the cost base right is where many people leave money on the table, because it includes far more than the purchase price.
The cost base generally has five elements:
| Element | What it covers |
|---|---|
| 1. Acquisition cost | What you paid for the asset |
| 2. Incidental costs | Brokerage, stamp duty, legal and agent fees, valuation costs |
| 3. Ownership costs | Rates, land tax, interest and insurance (only if not otherwise claimed) |
| 4. Capital improvements | Cost of improving or adding to the asset |
| 5. Title costs | Costs of establishing, preserving or defending your title |
Keeping records of every one of these — for the entire time you own the asset — is what lets you legitimately reduce the gain. If you have already claimed an expense as a tax deduction (such as interest on a rental property), you generally cannot also include it in the cost base.
The 50% CGT discount
If you are an individual (or a trust) and you have held the asset for more than 12 months, you may be entitled to the 50% CGT discount — you only pay tax on half of the gain. This is the single most valuable CGT concession for most investors.
The discount differs by entity type:
| Who holds the asset | CGT discount on assets held >12 months |
|---|---|
| Individuals and trusts | 50% |
| Complying super funds (incl. SMSFs in accumulation) | 33.3% |
| Assets in SMSF pension (retirement) phase | Effectively nil CGT |
| Companies | No discount |
The 12-month clock generally runs from the day after you acquired the asset to the date of the CGT event. Because the discount halves the taxable gain for individuals, the timing of a sale around the 12-month mark can be worth thousands.
A quick worked example
Suppose you buy $20,000 of shares, pay $30 brokerage to buy and $30 to sell, and sell them 18 months later for $32,000.
- Capital proceeds: $32,000 − $30 = $31,970
- Cost base: $20,000 + $30 = $20,030
- Gross capital gain: $31,970 − $20,030 = $11,940
- 50% discount (held >12 months): −$5,970
- Net capital gain added to income: $5,970
That $5,970 is added to your other income and taxed at your marginal tax rate. Had you sold at 11 months instead, the full $11,940 would be taxable.
The 9 topics in this CGT guide
CGT touches every kind of investment differently. These detailed guides make up the rest of this hub:
- Working out the numbers — our capital gains tax calculator guide walks through the CGT formula with worked examples and a step-by-step manual calculation.
- The core concession — the CGT discount (50% and the 12-month rule) explains who qualifies and how the 33.3% super rate works.
- Shares — CGT on shares covers selling parcels, brokerage in the cost base and how franking interacts with gains.
- Investment property — CGT on investment property deals with improvements, depreciation and the property cost base.
- Your home — the main residence CGT exemption and six-year rule explains when your home is (and isn’t) exempt.
- Reducing your bill — how to reduce or minimise CGT legally covers timing, losses and super.
- Inherited assets — CGT on inherited assets covers deceased estates and the two-year rule.
- Super and SMSFs — CGT and SMSF / super explains the 33.3% discount and nil tax in pension phase.
- Losses — capital losses and carry-forward shows how to offset gains and bank losses for the future.
Common pitfalls
- Forgetting the contract date. A June contract that settles in July is still a gain in the earlier financial year.
- Losing cost-base records. Without evidence of brokerage, improvements and incidental costs, you may overstate your gain.
- Missing the 12-month mark. Selling at 11 months forfeits the 50% discount entirely.
- Assuming your home is always exempt. Renting it out or running a business from it can create a partial gain — see the main residence exemption.
- Ignoring crypto swaps. Trading one crypto for another is a CGT event even though no cash changes hands.
This article is general information only and not financial or tax advice; consider your own circumstances and speak to a licensed adviser or the ATO before acting.