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 — and for individuals, trusts and partnerships the discount now has an end date.

Read this first if you are planning a future sale. Everything below describes the rules for CGT events before 1 July 2027. From that date the 50% discount is abolished for individuals, trusts and partnerships and replaced by CPI cost base indexation plus a 30% minimum tax. That is enacted law, not a proposal — see what the final law says, or model a specific sale with the CGT reform calculator.

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.

How long this lasts

For CGT events on or after 1 July 2027, individuals, trusts and partnerships no longer get the 50% discount. Two things replace it:

• CPI cost base indexation for assets held at least 12 months — you are taxed on the real gain rather than the nominal one. Every cost base element is indexed except the third (costs of ownership).
• A 30% minimum tax on the post-reform portion of the gain, under a new Division 119.

Assets you already hold are not caught retrospectively. Anything held at 30 June 2027 is treated as sold and immediately reacquired just before 1 July 2027: the gain accrued up to that point keeps the legacy 50% discount and is deferred until you actually sell, while growth after that date is indexed and exposed to the minimum tax.

The main residence exemption is unchanged, companies are unaffected (they never had the discount), and complying super funds keep their 33 1/3% discount.

Who is eligible?

The CGT discount is available to:

• Australian resident individuals — full 50% discount, for disposals before 1 July 2027
• Superannuation funds — 33.33% discount, which the reform does not touch
• Trusts — can pass the discount to resident individual beneficiaries, again for disposals before 1 July 2027

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.

The 12-month test outlives the discount itself: from 1 July 2027 it becomes the gate for CPI indexation instead, so an asset sold inside 12 months still gets neither concession.

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

This example assumes a disposal before 1 July 2027, while the discount still applies.

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.

One caveat that did not exist before: if the wait pushes the sale past 1 July 2027, you are no longer comparing “discount vs no discount” but “discount vs indexation plus the 30% minimum tax”, and for a short holding period the answer can flip. The CGT reform calculator compares the two treatments for a given sale date.

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
• From 1 July 2027 the discount is gone for individuals, trusts and partnerships, replaced by CPI indexation plus a 30% minimum tax — gains accrued before that date keep the discount under the transitional rules