Working out capital gains tax (CGT) is not as hard as it looks once you know the formula. Because there is no separate CGT rate in Australia — your net capital gain is simply added to your income and taxed at your marginal tax rate — a “CGT calculator” is really a tool for getting the gain right, then applying the discount and your losses. This guide walks through the formula, three worked examples and a step-by-step method you can follow with a spreadsheet.
For the full background on how CGT fits into the tax system, start with our pillar guide, capital gains tax in Australia.
Try it now: the free Cockatoo Capital Gains Tax Calculator does these steps for you — it applies the discount and estimates the tax at your marginal rate. The rest of this article shows exactly how the numbers work so you can check any figure yourself.
The CGT formula
At its simplest, CGT works in four steps:
- Capital proceeds − cost base = gross capital gain (or a capital loss if negative).
- Subtract current-year and carried-forward capital losses from your gross gains.
- Apply the CGT discount (50% for individuals and trusts on assets held more than 12 months).
- Add the net capital gain to your assessable income and tax it at your marginal tax rate.
Written out:
Net capital gain = (Capital proceeds − Cost base − Capital losses) × (1 − discount)The discount is 50% for individuals and trusts (assets held >12 months), 33.3% for complying super funds, and there is effectively nil CGT on assets sold while an SMSF is in pension phase. Companies get no discount. See the CGT discount and 12-month rule for the detail.
The order matters
Losses are applied before the discount, and you can choose which gains to offset first. Because the discount only halves the gain that survives after losses, it is usually smartest to offset losses against your non-discounted gains first (short-held assets), leaving more of the discounted gains intact. We cover this in capital losses and carry-forward.
The cost base — where the calculation is won or lost
Your cost base is far more than the purchase price. It includes:
- What you paid for the asset
- Incidental costs: brokerage, stamp duty, legal, agent and valuation fees
- Ownership costs not otherwise claimed (rates, interest, insurance)
- Capital improvements
- Costs of establishing or defending your title
Every dollar you legitimately add to the cost base reduces the gain. Keep records for the whole time you own the asset.
Worked example 1: Shares, held more than 12 months
Priya buys 1,000 shares at $12 each and pays $20 brokerage. Eighteen months later she sells them for $19 each, paying $20 brokerage to sell.
| Item | Amount |
|---|---|
| Capital proceeds ($19,000 − $20) | $18,980 |
| Cost base ($12,000 + $20) | $12,020 |
| Gross capital gain | $6,960 |
| 50% discount (held >12 months) | −$3,480 |
| Net capital gain | $3,480 |
Priya adds $3,480 to her income for the year and pays tax on it at her marginal tax rate. See CGT on shares for more share-specific detail.
Worked example 2: Investment property, with a capital loss offset
Tom sells an investment property. His capital proceeds are $780,000 and his cost base (purchase price, stamp duty, legal fees and a $40,000 renovation) totals $610,000. He also has a $25,000 carried-forward capital loss from shares.
| Item | Amount |
|---|---|
| Capital proceeds | $780,000 |
| Cost base | $610,000 |
| Gross capital gain | $170,000 |
| Less carried-forward loss | −$25,000 |
| Gain after losses | $145,000 |
| 50% discount (held >12 months) | −$72,500 |
| Net capital gain | $72,500 |
Tom adds $72,500 to his taxable income. A large one-off gain like this can push part of his income into a higher bracket for the year, so timing matters — see how to reduce CGT legally. For property specifics, see CGT on investment property.
Worked example 3: Sold within 12 months (no discount)
Sam buys shares for $8,000 and sells them 10 months later for $11,000, with $30 brokerage each way.
| Item | Amount |
|---|---|
| Capital proceeds ($11,000 − $30) | $10,970 |
| Cost base ($8,000 + $30) | $8,030 |
| Gross capital gain | $2,940 |
| Discount (held <12 months) | $0 |
| Net capital gain | $2,940 |
Because Sam held for under 12 months, the whole $2,940 is taxable. Had he waited two more months, only $1,470 would have been. This is the single biggest reason to watch the 12-month mark.
Step-by-step: calculating CGT by hand
- List every asset you disposed of during the financial year and the CGT event date (usually the contract date, not settlement).
- Work out capital proceeds for each — the sale price less selling costs.
- Build the cost base for each — purchase price plus every eligible cost element.
- Calculate each gross gain or loss (proceeds − cost base).
- Add up all gains, then subtract all capital losses (current year first, then carried-forward). Apply losses to non-discounted gains first where possible.
- Apply the discount to eligible gains (50% for individuals on assets held >12 months).
- Add the net capital gain to your other income and estimate tax at your marginal tax rate. Check current rates and thresholds at ato.gov.au.
What a calculator can’t do for you
A calculator handles the arithmetic, but the inputs are where judgement is needed. It cannot know which cost-base elements you’re entitled to include, whether an expense was already claimed as a deduction (and so must be left out), which parcel of shares you’ve chosen to sell, or whether a property qualifies for a full or partial main residence exemption. Those decisions can change the result far more than the maths. So treat any calculator — ours included — as a way to check a number you already understand, not a substitute for understanding it. When the figures are large or the situation is unusual (a property that was once your home, an inherited asset, a subdivision), the value of a good accountant usually far outweighs the fee.
A note on foreign residents and special assets
The standard formula assumes an Australian-resident individual holding ordinary investments. It changes for foreign residents (the 50% discount is restricted, and the main residence exemption may not apply), for collectables and personal-use assets (which have their own thresholds and loss rules), and for assets acquired before CGT began on 20 September 1985 (generally exempt). If any of these apply, check the current rules at ato.gov.au before relying on the basic calculation.
Common calculation mistakes
- Using the settlement date instead of the contract date to decide the financial year.
- Applying the discount before losses — losses come first.
- Forgetting incidental costs like brokerage and stamp duty in the cost base.
- Claiming the discount on an asset held under 12 months — it does not apply.
- Double-counting expenses already claimed as deductions.
Once you can build a cost base and apply the discount, the rest is arithmetic. For the concessions that reduce these numbers, read the CGT discount, and for property and shares specifically, CGT on property and CGT on shares.
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.