Capital Gains Tax in Australia 2026: Complete Guide

What Is Capital Gains Tax and When Does It Apply?

Capital gains tax in Australia applies when you dispose of a CGT asset and make a profit. The ATO defines a CGT event as any transaction that realises a capital gain or capital loss. The most common CGT events include selling shares listed on the ASX, selling an investment property, disposing of cryptocurrency, transferring assets as gifts, and receiving compensation or insurance payouts for an asset. It is important to understand that CGT is triggered at the point of disposal, not when you actually receive the money.

CGT was introduced in Australia on 20 September 1985, meaning only assets acquired on or after that date are subject to it. If you own pre-CGT assets, those disposals are generally exempt. For most Australians investing today, however, all assets will fall under the CGT rules. The gain or loss is calculated as the difference between the asset's cost base — what you paid for it plus eligible associated costs — and the capital proceeds you receive when you sell.

Capital losses can be used to offset capital gains in the same income year, or carried forward indefinitely to offset future capital gains. However, capital losses cannot be used to reduce your ordinary income, such as your salary or wages. This distinction is critical: if you have A$10,000 in capital losses from a failed share investment, you must wait until you have a future capital gain to use them — you cannot simply deduct them from your employment income on your tax return.

The 50% CGT Discount: Your Most Powerful Tool

One of the most valuable concessions in the Australian tax system is the 50% CGT discount, available to individual taxpayers who have held a CGT asset for more than 12 months before disposing of it. Under this rule, you only include half of your net capital gain in your assessable income. For example, if you sell ASX shares after 18 months and realise a capital gain of A$20,000, you only add A$10,000 to your taxable income for that financial year. This single rule can dramatically reduce the tax you pay on long-term investments.

The 12-month holding period is measured from the date of acquisition to the date of the CGT event — typically the contract date for property or shares, not the settlement date. Superannuation funds also receive a CGT discount, though theirs is 33.3% rather than the 50% available to individuals. Companies and corporate entities are not eligible for the CGT discount at all, which is one reason many Australians choose to hold investment assets personally or through a family trust structure rather than through a company.

To apply the 50% discount, you must first apply any available capital losses against your total capital gains before halving the remainder. The ATO requires this sequencing: offset losses first, then apply the discount to the net gain. If your capital losses wipe out your capital gains entirely, there is no gain to discount, and any remaining losses are carried forward to future years. Keeping accurate records of your cost base, purchase dates, and all associated costs is essential to maximise this concession legitimately.

How CGT Is Calculated and Added to Your Income

CGT is not taxed at a fixed rate. Instead, your net capital gain is added to your other assessable income — salary, rental income, dividends, business income — and the total is taxed at your marginal income tax rate for that financial year. In 2026, Australia's marginal tax rates range from 0% for income under A$18,200 up to 45% for income exceeding A$190,000, plus the Medicare levy of 2%. This means a high-income earner could effectively pay up to 47% on a short-term capital gain, while the same person could pay 23.5% on a long-term gain after applying the 50% discount.

To calculate your capital gain, start with your capital proceeds (the sale price). From this, subtract the cost base of the asset. The cost base includes the original purchase price, brokerage fees or stamp duty paid on acquisition, legal costs, and certain ongoing ownership costs for property such as capital improvement expenses. It is important to keep receipts and records for all these costs, as they directly reduce your taxable gain. For shares, the ATO's myTax platform and pre-fill data from your broker can assist, but you remain responsible for accuracy.

Consider this example: You purchase 500 shares in a large ASX-listed company in March 2024 for A$15,000 including brokerage. You sell them in June 2026 for A$22,000 less A$200 brokerage, giving proceeds of A$21,800. Your capital gain is A$21,800 minus A$15,000 equals A$6,800. Because you held the shares for more than 12 months, you apply the 50% discount, leaving a net capital gain of A$3,400 to add to your taxable income. If your total income including the gain puts you in the 32.5% tax bracket, the additional tax owed on the gain is approximately A$1,105 — considerably less than if you had sold within 12 months.

Main Residence Exemption: When Your Home Is CGT-Free

The main residence exemption is one of the most significant CGT concessions for Australian homeowners. If a property has been your main residence for the entire period you owned it and is not used to produce income, the capital gain on its sale is fully exempt from CGT. This exemption is why selling the family home — even for a substantial profit — does not result in a tax bill for most Australians. However, the exemption is not automatic in every situation, and there are several scenarios where it may be only partial.

If you rent out part of your home, use it for business purposes, or rent it out for a period while living elsewhere, the exemption is proportionally reduced. For example, if you rented out your home for three of the ten years you owned it, you may only claim a 70% exemption on any capital gain. There is also a six-year rule that allows you to treat a property as your main residence for up to six years after you move out, provided you do not claim another property as your main residence during that time — a useful strategy for those who rent elsewhere for work. Foreign residents are subject to additional restrictions on the main residence exemption introduced in recent years, so seek specific advice if this applies to you.

Crypto, Inherited Assets, and How to Report CGT

The ATO has been clear since 2014 that cryptocurrency is a CGT asset, not a currency. Every time you sell crypto, exchange one cryptocurrency for another, use crypto to purchase goods or services, or transfer crypto between wallets you do not control, you trigger a CGT event. The capital gain or loss is calculated in Australian dollars at the time of each transaction using the market value. The 50% CGT discount applies to crypto held for more than 12 months, just as it does for shares or property. Given the high volume of transactions many crypto investors make, keeping detailed records — including dates, values in AUD, and transaction fees — is absolutely essential. The ATO actively uses data-matching with Australian crypto exchanges to identify taxpayers who fail to report crypto gains.

When you inherit assets, the CGT treatment depends on when the deceased acquired the asset and whether it was their main residence. Generally, you are taken to have acquired the inherited asset at the date of the deceased's death, and the cost base resets to the market value at that date or the deceased's original cost base, depending on circumstances. If you sell an inherited property that was the deceased's main residence within two years of their death, it is generally exempt from CGT. Inherited pre-CGT assets (acquired before 20 September 1985) are also usually exempt. Always consult a registered tax agent when dealing with deceased estates, as the rules are complex. To report CGT on your Australian tax return, you complete the capital gains section in myTax or your paper return, listing each CGT event, the proceeds, cost base, any applicable discount, and the net capital gain. If the calculations are complex, a registered tax agent can assist and their fees may themselves be tax deductible.

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