What is Capital Gains Tax?
Capital Gains Tax (CGT) is not a separate tax in Australia — it is the income tax you pay on the capital gain you make when you sell or dispose of an asset. The net gain is added to your taxable income and taxed at your marginal rate for the year.
CGT applies to any capital asset: shares, investment properties, cryptocurrency, collectables, and business assets. Your main home is generally exempt. If you want to see where your marginal rate comes from, the income tax guide is the right companion page.
CGT is not a flat tax rate
2027 reform — heads-up
The Government has announced that from 1 July 2027 the 50% CGT discount would be replaced by CPI cost-base indexation and a 30% minimum tax for individuals, trusts and partnerships — announced policy under consultation, not yet legislated. Jump to the 2027 reform summary ↓ or read the dedicated reform guide →
How CGT is Calculated
Your capital gain is the sale proceeds minus the cost base; the taxable gain applies any discount; and the extra tax is the taxable gain at your marginal rate:
Capital Gain = Sale Proceeds − Cost Base
Taxable Gain = Capital Gain × Discount (if applicable)
Extra Tax = Taxable Gain × Marginal Tax Rate
Definition
Cost base
The 50% CGT Discount
If you are an individual (or trust) and you held the asset for more than 12 months before selling, you only include 50% of the capital gain in your taxable income. For most individual investors, this is the main CGT concession worth planning around — it's also what shifts the maths when you're weighing whether to pay off your mortgage or invest.
This is current law. The Government has announced a proposal to replace the discount from 1 July 2027 — see the 2027 reform section below.
| Scenario | Capital gain | Taxable amount | Extra tax (37%) |
|---|---|---|---|
| Held < 12 months (no discount) | $40,000 | $40,000 | $14,800 |
| Held > 12 months (50% discount) | $40,000 | $20,000 | $7,400 |
Note on the 12-month rule
2027 Reform: What's Changing
The 2026-27 Federal Budget announced that, from 1 July 2027, the 50% CGT discount for individuals, trusts and partnerships would be replaced by two mechanisms working together. The change is announced policy under consultation — not yet legislated:
- CPI cost-base indexation. Your cost base is grown by the Consumer Price Index over your holding period, similar to the rules that applied between 1985 and 1999. Only the gain above inflation is taxable. The 12-month holding rule is unchanged.
- 30% minimum tax on real gains. If your marginal rate on the gain would otherwise be below 30%, a top-up brings it up to 30%. Taxpayers receiving any means-tested support payment (Age Pension, JobSeeker) in the realisation year are exempt from this minimum.
- Election for qualifying new builds. Investors who buy a qualifying new residential build can choose either the old 50% discount or the new indexation + 30% minimum tax. Subsequent purchasers of the same dwelling lose the election.
Existing assets would get transitional treatment: the gain that accrued before 1 July 2027 keeps the 50% discount (using the asset's deemed value at that date), and the gain that accrues after is taxed under indexation + the 30% minimum. Super funds (including SMSFs), companies, the main residence exemption, the small business CGT concessions, and the existing affordable-housing discount are unchanged.
Want the full breakdown?
The 2027 CGT Reform guide covers the transitional valuation rules, the new-build definition, the means-tested-support exemption, and Treasury's own worked examples in full. Property investors should also read the companion 2027 negative gearing reform guide — the loss-offset changes were announced in the same Budget package.
Effective CGT Rates by Income Bracket (2025–2026)
There is no flat CGT rate in Australia — your rate is your marginal income tax rate, halved for assets held more than 12 months. With the 50% discount, the effective CGT rate for long-term assets is exactly half your marginal rate:
| Taxable income (+ gain) | Marginal rate | Short-term CGT | Long-term CGT ({discountPct}% disc.) |
|---|---|---|---|
| $0 – $18,200 | 0% | 0% | 0% |
| $18,201 – $45,000 | 16% | 16% | 8% |
| $45,001 – $135,000 | 30% | 30% | 15% |
| $135,001 – $190,000 | 37% | 37% | 18.5% |
| $190,001+ | 45% | 45% | 22.5% |
What Triggers a CGT Event?
You only realise a capital gain or loss when a CGT event occurs — and several events happen without any money changing hands:
Selling an asset
Selling shares, property, or crypto triggers CGT on the difference between proceeds and cost base.
Gifting an asset
Gifting is treated as a disposal at market value, even though no money changes hands.
Converting crypto
Trading one cryptocurrency for another is a disposal — each trade is a separate CGT event.
Company buyback
If a company buys back your shares, that is treated as a disposal for CGT purposes.
Death
Assets pass to beneficiaries at cost base — no CGT on death itself. CGT applies when the beneficiary sells.
Ceasing to be a resident
Becoming a non-resident triggers a deemed disposal of most assets at market value.
Capital Losses
A capital loss arises when you sell an asset for less than its cost base — and it can only ever offset capital gains, never wages or other income. Five rules govern how losses work:
- 1Capital losses can only offset capital gains — not ordinary income (wages, rent, dividends).
- 2If your total capital losses exceed your total capital gains in a year, the excess loss is carried forward indefinitely.
- 3You apply losses before the 50% discount. First offset gross gains with losses, then apply the 50% discount to what remains.
- 4Losses on collectables (art, jewellery, antiques) can only be offset against gains from other collectables.
- 5Losses on personal use assets (e.g., a boat you used personally) are generally disregarded.
Tax loss harvesting
CGT Exemptions and Concessions
The biggest CGT exemption is your main residence; personal use assets and small business concessions cover most of the rest:
Main residence exemption
Personal use assets
Small business CGT concessions
Practical CGT Strategies
The biggest levers, in rough order of impact: hold past 12 months, time the disposal year, harvest losses, and use super where it fits.
Hold for 12+ months
Halve your taxable gain under the 50% discount — the single biggest lever available.
Complexity: LowPlan around the proposed 1 July 2027 transition
Under the announced transitional rules, pre-2027 gains keep the 50% discount via a deemed value at 1 July 2027 — no need to rush a sale. Modelling matters when expected real returns are low (indexation can help) or high (indexation may cost more vs the flat discount).
Complexity: Medium — depends on asset and return assumptionsTime the disposal year
If your income will be lower next year (e.g., parental leave, career break), defer the sale to pay less tax on the gain.
Complexity: LowHarvest losses before 30 June
Sell underperforming assets to create losses that offset gains realised this year.
Complexity: LowContribute gain to super
A large concessional contribution can reduce your taxable income, lowering the bracket your gain lands in. Check the caps and trade-offs in the super contributions guide first.
Complexity: MediumSpread gains across spouses
Jointly held assets split gains between owners at their marginal rates. However, transferring an appreciated asset to a spouse is a disposal at market value — it crystallises the gain immediately. This works for assets purchased jointly from the outset, not for transfers after a gain has accrued.
Complexity: Complex — get professional adviceHold in super or SMSF
Capital gains inside super are taxed at concessional rates in accumulation phase and are tax-free in pension phase.
Complexity: High — requires SMSF setupIf a large concessional contribution is part of the plan, the super contributions guide covers the caps and the carry-forward rule that often makes it possible.
Frequently Asked Questions
How much capital gains tax do I pay in Australia?
Capital gains are added to your other income and taxed at your marginal rate. If you held the asset for more than 12 months, only half the gain is included (the 50% CGT discount). So a $20,000 gain on a long-term asset is treated as $10,000 of extra income for tax purposes.
How much capital gains tax will I pay on $100,000?
It depends on your other income. For someone earning $90,000 who makes a $100,000 gain on an asset held over 12 months, the 50% discount means $50,000 is added to taxable income — about $15,350 of extra income tax for 2025-26 before the Medicare levy. Without the discount (held under 12 months), the full gain is added and the tax roughly doubles.
What is changing for CGT in 2027?
The Government announced in the 2026-27 Budget that, from 1 July 2027, the flat 50% CGT discount for individuals, trusts and partnerships would be replaced by CPI cost-base indexation plus a 30% minimum tax rate on real capital gains. The change is announced policy under consultation — not yet legislated. The 12-month holding rule stays, super funds and companies are unaffected, and existing assets get transitional treatment.
Do I need to sell my investment property before July 2027?
Not just because of the announced reform. Under the proposed transitional rules, the gain accrued before 1 July 2027 keeps the 50% discount via the asset's deemed value at that date — you don't lose the pre-2027 portion by selling later. Whether early disposal saves tax depends on your real return profile and marginal rate.
Do I pay CGT when I sell my home?
Your main residence is exempt from CGT for the period you lived in it. If the property was always your primary home, the full gain is exempt. If it was rented out for part of the time, a partial exemption applies based on the proportion of time it was your main residence.
Can I offset capital losses against other income?
No. Capital losses can only be offset against capital gains, not ordinary income. Unused capital losses are carried forward indefinitely and offset future capital gains.
When do I need to report a capital gain?
You must report capital gains in your tax return for the financial year in which you disposed of the asset (sold, gifted, or otherwise transferred ownership). The ATO requires this even if you reinvested the proceeds.
Do I pay CGT on crypto in Australia?
Yes. The ATO treats cryptocurrency as property, not currency. Each disposal (sale, trade, or use to purchase goods) is a CGT event. The 50% discount applies if you held the crypto for more than 12 months.
What is the cost base for CGT?
The cost base is what you paid for the asset plus associated costs: purchase costs (stamp duty, legal fees, agent's commission), costs of owning it (non-deductible holding costs), and costs of selling it (agent's commission, legal fees). Reducing your sale proceeds by the cost base gives your capital gain.
Is there CGT on superannuation?
Within superannuation, earnings (including capital gains) in accumulation phase are taxed at 15%, with a one-third discount on gains from assets held more than 12 months (effectively 10%). In pension phase the tax rate is 0%.