Capital Gains Tax (CGT)
Tax on the profit made from selling or disposing of an asset, such as property, shares, or cryptocurrency.
Capital Gains Tax (CGT) applies to the profit (capital gain) you make when you sell, gift, or otherwise dispose of a CGT asset. Despite the name, CGT is not a separate tax — capital gains are added to your assessable income and taxed at your marginal income tax rate. CGT applies to assets acquired on or after 20 September 1985, including real estate (other than your main residence), shares, managed fund units, cryptocurrency, collectables over $500, and business assets.
A capital gain is calculated as the difference between the capital proceeds (what you receive) and the cost base (what you paid, plus incidental costs like stamp duty, legal fees, and improvement costs). If the proceeds are less than the cost base, you have a capital loss, which can only be offset against capital gains (not other income) and can be carried forward indefinitely.
For CGT events before 1 July 2027, individuals and trusts that held an asset for at least 12 months before disposal are eligible for the 50% CGT discount, meaning only half the net capital gain is included in assessable income. Complying super funds receive a one-third (33.33%) discount. Companies receive no CGT discount.
Acts 49 and 50 of 2026 abolish the general 50% discount for individuals, trusts and partnerships for CGT events on or after 1 July 2027. In its place, assets held 12 months or more receive CPI cost-base indexation, and a 30% minimum tax applies to the real (post-indexation) gain. Complying super funds keep their one-third discount. Gains accrued up to the day before commencement keep the legacy 50% discount through a transitional split, so a long-held asset sold later is taxed under both regimes — which makes the sale date, not just the holding period, the key timing decision.
How it works
Capital Gains Tax isn't a standalone tax with its own rate — it's the mechanism by which a profit on selling or disposing of an asset gets folded into your assessable income and taxed at your ordinary marginal rate. It only applies to CGT assets acquired on or after 20 September 1985; anything acquired before that date is generally exempt regardless of when it's sold. The asset classes covered are broad — real estate other than your main residence, shares, managed fund units, cryptocurrency, business assets, and collectables worth more than $500 — but each has its own quirks in how the gain or loss is worked out.
You encounter CGT at the point of lodging a tax return for the year an asset was sold or otherwise disposed of, using the capital gains section of the return to report the gain (or loss) and any discount applied. Because the gain is simply added to your other income for the year, selling an asset in a high-income year, alongside a large bonus or before a pay rise takes effect, can push the taxed portion of the gain into a higher bracket than selling in a quieter income year would — timing the disposal is one of the few levers an individual has over the tax outcome.
The 50% CGT discount is the detail that trips people up most often: for a CGT event before 1 July 2027 it only applies if you've held the asset for at least 12 months, and only to individuals and trusts — complying super funds get a smaller one-third discount, and companies get none at all. Acts 49 and 50 of 2026 abolish that general discount for CGT events on or after 1 July 2027, replacing it with CPI cost-base indexation on assets held 12 months or more plus a minimum tax on the real gain, so the sale date now matters as much as the holding period. A capital loss can only reduce other capital gains, never salary, interest, or rental income, and any unused loss simply carries forward to future years rather than disappearing. People also sometimes forget that a CGT event isn't limited to a straightforward sale — gifting an asset, losing it, or a company cancelling shares can all trigger the same tax consequence.
Example: CGT on shares sold after 14 months
You bought shares for $20,000 and sold them 14 months later for $30,000, a capital gain of $10,000 before any discount.
Because you held the shares for more than 12 months and sold before 1 July 2027, the 50% CGT discount applies, so only $5,000 of the gain is added to your assessable income and taxed at your marginal rate alongside your salary and other income for the year.
Calculate it yourself
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50% CGT Discount
A 50% reduction in capital gains for individuals and trusts who held the asset for at least 12 months before disposal.
Cost Base
The total cost of acquiring and holding an asset, used to calculate the capital gain or loss on disposal.
Capital Loss
A loss made when you dispose of a CGT asset for less than its cost base — can offset capital gains but not other income.
CGT Event
A specific event that triggers a capital gains tax obligation, such as selling, gifting, or losing a CGT asset.
Principal Place of Residence (PPOR)
Your main home, which is generally exempt from capital gains tax when sold.