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 most capital assets, including shares, investment properties, cryptocurrency, collectables, and business assets. Your main home can be exempt if the conditions are met. 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 — enacted
Act No. 49 of 2026 enacted CPI cost-base indexation for eligible gains and Division 119's 30% minimum-tax mechanism for eligible Australian-resident individuals from 1 July 2027, with transitional and eligibility rules. Jump to the 2027 reform summary ↓ or read the dedicated reform guide →
How CGT is Calculated
Work out the capital gain first, then apply losses and any eligible discount to arrive at the net capital gain included in taxable income. Estimate the tax effect by comparing total income tax with the net capital gain against total income tax without it:
Capital Gain = Sale Proceeds − Cost Base
Net capital gain = Apply losses and any eligible CGT discount
Tax effect = Total income tax with gain − total income tax without gain
Definition
Cost base
Source: ATO — Calculating your CGT.
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 the pre-1 July 2027 method. The enacted reform changes later CGT events, subject to transitional gains and the qualifying-new-dwelling discount — see the 2027 reform section below.
| Scenario | Capital gain | Taxable amount | Income-tax effect |
|---|---|---|---|
| Held < 12 months (no discount) | $40,000 | $40,000 | Compare total tax with and without this amount |
| Held > 12 months (50% discount) | $40,000 | $20,000 | Compare total tax with and without this amount |
Note on the 12-month rule
2027 Reform: What's Changing
Treasury Laws Amendment (Tax Reform No. 1) Act 2026 enacted the reform for CGT events from 1 July 2027. Its principal mechanisms and exceptions are:
- CPI cost-base indexation. Eligible cost-base elements are indexed by CPI only where the statutory asset, entity, Australian-residency and holding-period conditions are met. The 12-month holding test is one condition for indexation, but does not switch off Division 119 for a shorter-held eligible individual gain.
- 30% minimum tax on covered gains. For an individual who meets its Australian-residency rule, Division 119 compares 30% of the covered gain with basic income tax before offsets, rounds the positive gap down to whole dollars, and exempts recipients of payments specifically listed in section 119-15. A trust or partnership is not itself generically liable to the top-up, although a relevant trust gain can flow to an eligible individual.
- Election for qualifying new builds. Section 115-102 applies the 50% discount by default to an eligible gain on a qualifying new residential dwelling. The detailed dwelling requirements are to be set by Ministerial instrument, so Budget examples should not be treated as a complete legal test.
For some assets already held on 1 July 2027, the law effectively splits the calculation at that date: it measures the earlier gain under a transition rule, then starts the later calculation from a new value. This applies only to eligible post-CGT assets held by covered individuals or trusts; a qualifying earlier gain can keep the 50% discount. Pre-CGT assets use a separate cost-base reset, while qualifying new dwellings, affordable housing, companies and super funds have different treatment. Division 119's top-up applies only at the eligible Australian-resident individual level.
Want the full breakdown?
The 2027 CGT Reform guide covers the transitional valuation rules, the new-build definition, the section 119-15 listed-payment 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 (2026–2027)
There is no flat CGT rate in Australia. A net capital gain is added to taxable income, so different parts of a gain can fall into different tax brackets. For an eligible long-term gain, the 50% discount halves the amount included in taxable income; it does not make the final tax exactly half of one marginal rate.
| Taxable income (+ gain) | Marginal rate | Next dollar of a short-term gain | Effective rate per $1 of gross long-term gain |
|---|---|---|---|
| $0 – $18,200 | 0% | 0% | 0% |
| $18,201 – $45,000 | 15% | 15% | 7.5% |
| $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
CGT is usually deferred through the deceased-estate rollover. A beneficiary commonly inherits the deceased's cost base for a post-CGT asset, while a pre-CGT asset commonly takes market value at death. Market-value exceptions and CGT event K3 can apply, so the asset and beneficiary's tax status matter.
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
Source: ATO — Your main residence (home).
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 enacted 1 July 2027 transition
For an eligible post-CGT asset covered by the individual or trust transitional rule, the pre-2027 deferred gain can keep the 50% discount through the 1 July 2027 reset. Other assets and holders have different treatment, so model the applicable rule before changing a sale date.
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
Super funds have separate CGT rules. Retirement-phase exempt current pension income can apply to income attributable to supporting assets, subject to fund-level conditions and apportionment.
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?
Your net capital gain is included in taxable income. For an eligible asset held more than 12 months, the 50% CGT discount generally means half the gain is included. Work out the extra income tax by comparing your total tax with the net capital gain against your total tax without it: a gain can cross tax brackets and affect other parts of your tax position, so it does not have one fixed CGT rate.
How do I estimate tax on a capital gain?
Start by working out the capital gain and any eligible CGT discount, then compare the income tax on your full taxable income with the net capital gain against the income tax without it. The difference is the income-tax effect of the gain before other adjustments. A 50% discount reduces the amount included in taxable income; it does not guarantee that the final tax bill is exactly halved, because the gain can span tax brackets and interact with levies, offsets and other income.
What is changing for CGT in 2027?
Act No. 49 of 2026 enacted the CGT reform for events from 1 July 2027. Eligible cost bases can receive CPI indexation only where statutory asset, entity, Australian-residency and holding-period conditions are met. Division 119 can add a 30% minimum-tax top-up for an individual who meets its Australian-residency rule, measured against basic income tax before offsets. The 12-month rule is a condition for indexation, not Division 119. Assets already held at the start date are covered by different transitional rules depending on the holder and asset.
Do I need to sell my investment property before July 2027?
Not just because of the reform. For some assets already held on 1 July 2027, the law effectively splits the calculation at that date: it measures the earlier gain under a transition rule, then starts the later calculation from a new value. This applies only to eligible post-CGT assets held by covered individuals or trusts; a qualifying earlier gain can retain the 50% discount. Pre-CGT assets, qualifying new dwellings, affordable housing, companies and super funds have different treatment.
Do I pay CGT when I sell my home?
A dwelling that was your main residence can be fully exempt, but the result depends on conditions including when it became your home, whether you used any part to produce income, whether you had another main residence, the land area and your residency status. Renting it out or using part for business can produce a partial exemption. The absence rule can extend the exemption in some circumstances; it is not automatic.
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?
Super funds have separate CGT rules. In accumulation phase, a complying fund pays up to 15% on capital gains, with a one-third discount on eligible gains held for more than 12 months — an effective rate of about 10%. Income attributable to assets supporting retirement-phase income streams can be exempt current pension income. Where a fund cannot use the segregated method — including under the disregarded-small-fund-assets rule, triggered by a member's total super balance at a frozen statutory threshold — the exemption is worked out proportionately, and whether a transition-to-retirement income stream is in retirement phase also matters. Obtain advice for an SMSF or mixed-phase fund.