Capital gains tax (CGT) is often the silent sting in a successful investment story. As the ATO sharpens its focus in 2025, understanding how CGT works—and how the latest changes affect you—could be the difference between a tidy profit and an unexpected bill.
How Capital Gains Tax Works in 2025
CGT applies when you sell an asset for more than you paid for it. In Australia, this covers property (excluding your main residence in most cases), shares, crypto assets, and even collectibles. The gain is added to your assessable income and taxed at your marginal rate.
- 2025 ATO focus: The ATO has ramped up data-matching on property, crypto, and online share transactions, with new reporting requirements for digital asset exchanges and real estate agents.
- Main residence exemption: Still applies, but recent court decisions and ATO guidance have tightened the rules, especially for partial exemptions or when you rent out your home.
- Discounts: The 50% CGT discount for individuals holding assets longer than 12 months remains unchanged in 2025, but there are stricter substantiation requirements.
Key Changes and Common Traps for Investors
The 2025 tax year brings some subtle but important tweaks:
- Crypto and digital assets: All major Australian exchanges now report customer trades directly to the ATO. Even ‘swapping’ one crypto for another is a CGT event.
- Property investors: The ATO is targeting incorrect claims of the main residence exemption, particularly with Airbnb and short-term rentals. If you’ve partially rented your property, expect closer scrutiny and possibly reduced exemption.
- Record-keeping: The window for amending CGT records has tightened—investors must now keep documentation for five years after disposal, not from acquisition, aligning with updated ATO audit practices.
Example: If you bought an investment unit in Sydney in 2015 for $600,000 and sell it in June 2025 for $950,000, your $350,000 gain (minus eligible costs) is subject to CGT. If held for over a year, you may claim the 50% discount, but only if you have clear records.
Strategies to Reduce Your CGT Liability
While you can’t avoid CGT entirely, smart planning can soften the blow:
- Timing is everything: If you’re close to the 12-month holding period, waiting a few weeks could mean a 50% discount.
- Offsetting losses: Realised capital losses (e.g., from shares or crypto) can be offset against gains, reducing your overall taxable amount. Losses can be carried forward indefinitely.
- Superannuation contributions: Consider using a portion of your gain to make a concessional super contribution, which may reduce your taxable income and boost retirement savings.
- Cost base maximisation: Don’t overlook incidental costs—legal fees, stamp duty, and certain improvement expenses can be added to your cost base to reduce the gain.
Case in point: In 2025, many investors are strategically crystallising losses on underperforming shares to offset record property gains, a trend reflected in ATO statistics and tax agent advice.
Looking Ahead: Policy Rumblings and Market Implications
The Albanese government has signalled no imminent changes to CGT rates or the main residence exemption for 2025, despite ongoing debate. However, the rising popularity of digital assets and the government’s housing affordability agenda mean further reforms could be on the horizon.
For now, the best defence against CGT surprises is up-to-date knowledge and bulletproof documentation. With the property market in flux and markets volatile, 2025 is shaping up as a year where CGT smarts can seriously affect your bottom line.
