For many Australians, the concept of long-term capital gain or loss can seem like a technical tax issue best left to accountants. But with property, shares, and cryptocurrency all in the mix, understanding how these gains and losses work is essential for everyone aiming to build wealth and minimise tax in 2025. This guide breaks down what’s changed, how the rules work, and practical strategies for making the most of your investments.
What Are Long-Term Capital Gains and Losses?
A capital gain or loss arises when you sell an asset—like a house, shares, or digital currency—for more or less than you paid for it. In Australia, the key distinction is whether you held the asset for at least 12 months (making it a ‘long-term’ gain or loss). If so, you could be eligible for significant tax discounts, or you might be able to use losses to offset future gains.
- Long-term capital gain: Profit from selling an asset held for more than 12 months.
- Long-term capital loss: Loss from selling an asset held for more than 12 months.
Short-term gains (from assets held less than a year) are taxed at your full marginal rate, while long-term gains can be discounted—making the timing of your sale a key part of tax strategy.
2025 Policy Updates: What’s Changed for Australians?
Recent years have brought important changes to capital gains tax (CGT) in Australia, and 2025 is no exception. Here’s what’s new and what it means for investors:
- CGT discount unchanged for individuals: The 50% discount for assets held longer than 12 months remains in place, but the ATO has increased audit focus on accurate reporting—especially for crypto and property.
- Crypto assets under the microscope: From July 2024, digital currency exchanges must report transaction data directly to the ATO, making it harder to under-report capital gains or losses on crypto.
- Property investors face tighter rules: The government has clarified rules around main residence exemptions and ‘flipping’ properties, limiting some strategies that previously minimised CGT.
- Superannuation and small business relief unchanged: There’s no change to the small business CGT concessions or the ability to contribute some capital gains to superannuation tax-free—still key strategies for retirees and business owners.
For most Australians, these changes mean sharper scrutiny from the ATO, but also ongoing opportunities to reduce tax by timing asset sales and using losses wisely.
Real-World Examples: How Long-Term Gains and Losses Work
Let’s look at how these rules play out in everyday scenarios in 2025:
- Shares: Sarah bought $20,000 of CSL shares in June 2023 and sold them for $32,000 in July 2025. That’s a $12,000 capital gain. Because she held the shares for more than 12 months, she’s eligible for the 50% discount—so only $6,000 is added to her taxable income.
- Investment property: Tom sold his investment apartment in Brisbane after 18 months, making a $60,000 gain. After the discount, only $30,000 is taxed, potentially saving him thousands compared to a short-term sale.
- Cryptocurrency: Priya traded Bitcoin throughout 2023 and 2024. She sold a parcel in August 2025 for a $5,000 profit, but also realised a $2,000 long-term loss on another coin. She can offset the $2,000 loss against her $5,000 gain, and then apply the 50% discount to the remaining $3,000.
Remember: Long-term capital losses can’t be used to reduce ordinary income, but they can be carried forward indefinitely to offset future capital gains.
Smart Strategies for 2025: Minimising Tax and Maximising Value
With the ATO’s digital systems catching more errors and mismatches, being proactive is more important than ever. Here are practical tips for making the most of long-term capital gains and losses in 2025:
- Track your holding periods: Use digital tools or spreadsheets to monitor when you bought each asset and plan sales to maximise eligibility for the 50% discount.
- Harvest losses strategically: Consider selling underperforming assets before year-end to realise losses that can offset gains—especially if you expect a large capital gain from another source.
- Keep meticulous records: The ATO expects detailed documentation for every sale, including purchase price, sale price, and holding period.
- Review superannuation options: If you’re retiring or selling a business, explore whether you can use CGT concessions to boost your super and reduce tax.
- Beware the ‘main residence’ trap: If you’ve rented out your home, subdivided land, or flipped properties, check the latest rules to ensure you’re not caught out.
The bottom line: The rules around long-term capital gains and losses can be a powerful tool for building wealth, but they’re changing fast. Staying informed and proactive is the best way to keep more of your profits in your pocket.
