How the 12-Month CGT Discount Really Works

General information only. This is not tax or financial advice. Consult a registered tax agent for advice specific to your situation.

The 50% CGT discount is one of the most valuable tax concessions available to Australian investors. If you hold an asset for at least 12 months before selling, you can reduce your taxable capital gain by half. But the rules are more nuanced than many people realise.

What is the CGT discount?

When you sell an asset (like shares, ETFs, or investment property) for more than you paid, the profit is called a capital gain. In Australia, this gain is added to your assessable income and taxed at your marginal tax rate.

The 50% CGT discount allows eligible individuals to reduce this gain by half before adding it to their taxable income. This effectively halves the tax you pay on long-term investments.

Who is eligible?

The CGT discount is available to:

• Australian resident individuals — full 50% discount
• Superannuation funds — 33.33% discount
• Trusts — can pass the discount to resident individual beneficiaries

The discount is not available to:

• Companies
• Non-residents (for assets acquired after 8 May 2012)
• Assets held for less than 12 months

The 12-month holding period

To qualify for the discount, you must hold the asset for at least 12 months. This is calculated from the date you acquired the asset (usually the contract date, not settlement) to the date you disposed of it.

Important timing details

• The 12-month period is calculated to the day
• Contract date is typically used, not settlement date
• If you bought shares on 15 January 2025, you must sell on or after 16 January 2026 to qualify

A common mistake

Many investors assume “12 months” means selling in the same calendar month a year later. This isn’t quite right.

Example: You buy shares on 31 January 2025. To qualify for the CGT discount, you must sell on or after 1 February 2026 — that’s 12 months plus one day from the acquisition date.

How the discount is applied

The discount is applied after you’ve calculated your net capital gain:

1. Calculate your capital gain (sale price minus cost base)
2. Subtract any capital losses from the current or previous years
3. Apply the 50% discount to gains on eligible assets
4. Add the remaining amount to your assessable income

Worked example

Step	Amount
Sale price	$50,000
Cost base (purchase + costs)	$30,000
Gross capital gain	$20,000
Less: Prior year capital losses	$2,000
Net capital gain before discount	$18,000
50% CGT discount	-$9,000
Taxable capital gain	$9,000

If your marginal tax rate is 30%, you’d pay $2,700 in CGT on this sale. Without the discount, you’d pay $5,400.

Strategies to maximise the discount

1. Time your sales carefully

If you’re close to the 12-month mark, waiting a few extra days or weeks can halve your tax bill. Use our CGT calculator to see the difference.

2. Consider timing around financial year end

Selling just before or after 30 June can affect which financial year the gain falls into, potentially changing your marginal tax rate. See our sell this year vs next year scenario for a comparison.

3. Harvest losses before applying the discount

Capital losses are applied before the CGT discount. If you have assets trading at a loss, consider selling them in the same financial year to reduce your taxable gain.

What doesn’t qualify for the discount

Some CGT events don’t qualify for the 50% discount, even if you’ve held the asset for 12 months:

• Gains from collectibles (art, jewellery) acquired for less than $500
• Gains on assets subject to the foreign resident CGT withholding rules
• Some trust distributions where the discount was already applied

The discount and your main residence

Your main residence (principal place of residence or PPOR) is generally exempt from CGT entirely — so the 50% discount doesn’t apply because there’s no taxable gain in the first place.

However, if you have a partial main residence exemption (for example, you rented out the property for part of the time you owned it), the 50% discount can apply to the taxable portion of the gain.

Learn more about partial PPOR exemptions.

Key takeaways

• Hold assets for at least 12 months to qualify for the 50% CGT discount
• The holding period is calculated to the day — don’t sell too early
• Capital losses are applied before the discount
• Companies cannot access the discount
• Use the discount strategically alongside loss harvesting and timing

Related tools

• Capital Gains Tax Calculator — calculate your CGT with or without the discount
• Before vs after 12 months scenario — see the tax impact of selling early