Capital Gains Tax (CGT) Guide Australia 2025–2026
How CGT works, the 50% discount, cost base, losses, and how gains interact with your income tax bracket.
What is Capital Gains Tax?
Capital Gains Tax (CGT) is not a separate tax in Australia — it is the tax you pay on the capital gain you make when you sell or dispose of an asset. That 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.
Key point: CGT is not a flat tax rate
Your CGT is determined by your marginal income tax rate. A $30,000 gain added on top of a $120,000 salary is taxed at 37%. The same gain on a $40,000 salary is taxed at 30%. This makes tax planning critical when you have a large gain to realise.
How CGT is Calculated
The basic formula is simple:
Capital Gain = Sale Proceeds − Cost Base
Taxable Gain = Capital Gain × Discount (if applicable)
Extra Tax = Taxable Gain × Marginal Tax Rate
The cost base includes the purchase price plus all associated costs: stamp duty, legal fees, brokerage, and selling costs (agent's commission, advertising). You cannot include costs you've already claimed as tax deductions.
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. This is the most significant CGT concession available to Australian investors.
| 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 |
Example: $40,000 gain at 37% marginal rate. Holding for 12+ months saves $7,400 in tax.
Note on the 12-month rule
The 12-month period starts the day after you acquire the asset, not the day you acquire it. If you sell exactly 12 months after buying (same day), you do NOT qualify for the discount — you need to hold it for more than 12 months (at least 12 months and 1 day).
Effective CGT Rates by Income Bracket (2025–2026)
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 (50% 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% |
Excludes Medicare levy (2%). Your capital gain is added on top of your other income, so it may push you into a higher bracket.
What Triggers a CGT Event?
You only realise a capital gain or loss when a CGT event occurs. Common events include:
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.
Cease to be a resident
Becoming a non-resident triggers a deemed disposal of most assets at market value.
Capital Losses
When you sell an asset for less than its cost base, you make a capital loss. Key rules:
- 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
Selling assets at a loss before 30 June to offset gains is a legitimate strategy called "tax loss harvesting". Be careful of the wash-sale risk: buying back the same asset very soon after selling for a loss may be scrutinised by the ATO as a tax avoidance arrangement.
CGT Exemptions and Concessions
Main Residence Exemption
Your primary home is fully exempt from CGT while it is your main residence. Partial exemptions apply if you rented it out, used it for business, or it was not your main residence for the full ownership period. The 6-year absence rule allows you to rent out your main residence for up to 6 years and still claim the full exemption, if you don't have another main residence at the time.
Personal Use Assets
Assets used primarily for personal enjoyment (car, boat, furniture) are generally exempt from CGT. The exemption applies where the asset cost $10,000 or less. Gains on personal use assets are disregarded; losses are also disregarded.
Small Business CGT Concessions
Eligible small business owners may access additional CGT concessions including the 15-year exemption, 50% active asset reduction, retirement exemption (up to $500,000 lifetime), and rollover relief. These concessions can potentially reduce the taxable gain to zero.
Practical CGT Strategies
Hold for 12+ months
Save 50% of your CGT — the single biggest lever available.
Complexity: LowTime 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.
Complexity: MediumSpread gains across spouses
If assets are jointly held or transferred to a lower-income spouse, the gain is split and may land in a lower bracket.
Complexity: Medium — get advice before transferringHold in super or SMSF
Capital gains inside super are taxed at 10% (accumulation, long-term) or 0% (pension phase).
Complexity: High — requires SMSF setupCalculate Your CGT
Our CGT calculator estimates your tax on capital gains, including the 50% discount and the interaction with your other income.
Open CGT Calculator →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 50% of the gain is included (the CGT discount). So a $20,000 gain on a long-term asset is treated as $10,000 of extra income for tax purposes.
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%.
This guide is for general educational purposes only and does not constitute financial or tax advice. CGT rules are complex and situation-specific — consult a registered tax agent or accountant for advice on your circumstances. Information is based on ATO guidance current as at 2025–2026.