A clear guide to how Capital Gains Tax works on shares, property, and other assets in Australia.
If you buy and sell shares or other assets in Australia, you may need to pay Capital Gains Tax (CGT) on any profits you make. CGT is not a separate tax, it's the tax you pay on capital gains as part of your regular income tax. This guide explains the basics of CGT on shares and investments in simple terms.
When you sell shares, it's considered a "CGT event." If you make a profit, this is called a capital gain, and you must report it in your tax return. The amount of CGT you owe depends on factors like how long you held the shares and your total income for the year. For more details on CGT events, visit the ATO's CGT events page.
If you hold shares for more than 12 months before selling, you may qualify for the CGT discount. For individuals, the discount is 50%, meaning you only pay tax on half of your capital gain. For example, if you make a $6,000 profit on shares held for over a year, your taxable gain drops to $3,000. This is generally more relevant to a long-term share trading strategy. We have a separate guide on how the 50% CGT discount works covering eligibility, the 12-month test, and the changes from 1 July 2027, and the ATO publishes the official rules on its CGT discount page.
Keeping accurate records of your share transactions is crucial. You'll need details like the purchase and sale dates, the prices you paid and received, and any associated costs such as brokerage fees. These records are essential for calculating your capital gains or losses. The ATO provides guidance on record-keeping for CGT.
If you sell shares for less than you paid, you've made a capital loss. These losses can be used to offset capital gains in the same tax year or carried forward to future years, helping to lower your overall tax liability. However, capital losses can only offset capital gains, they can't be used to reduce other types of income like your salary.
Calculating capital gains and losses can be complex, especially if you have multiple transactions. There are different methods for working out CGT, such as the first-in, first-out method or the average cost method. Individuals can choose the method that results in the lowest capital gain. If you're unsure, consider seeking help from a tax professional or using our Tax Return Calculator to estimate your CGT liability.
Disclaimer: This guide offers general information about Capital Gains Tax in Australia and is not intended as financial or tax advice. Tax laws are complex and subject to change. Always refer to the official ATO website for the latest information, and consult a qualified tax professional for advice tailored to your situation.