Capital Gains Tax (CGT)
FAQs Australia
Every CGT question we get asked answered. No jargon, no “speak to your accountant” without an actual answer first. For every CGT FAQs
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Jun ’26
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ATO
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2026–27
General CGT FAQs
Capital gains tax (CGT) in Australia isn’t a separate tax it’s the tax you pay on the profit you make when you sell a CGT asset. That profit, called a capital gain, gets added to your taxable income for the year and taxed at your marginal rate. So if you earn $90,000 from your job and make a $30,000 taxable capital gain, the ATO treats you as if you earned $120,000 that year. You can get more information from Capital Gains Tax.
The basic formula is: Capital Gain = Sale Proceeds − Cost Base. Your cost base includes the original purchase price plus all acquisition costs (stamp duty, legal fees, brokerage) and any capital improvements you made. From the sale proceeds, you subtract selling costs (agent commission, legal fees). Calculate exact CGT by using CGT Tax Calculator.
It depends on your income and how long you held the asset. There’s no flat CGT rate in Australia — your capital gain is added to your other income and taxed at whatever bracket that puts you in. For most investors earning $45k–$135k, that’s 32.5%. Add 2% Medicare levy and the effective rate on a long-term gain (with the 50% discount) works out to about 16.25%.
At tax time, not at settlement. CGT is calculated and paid when you lodge your annual income tax return for the financial year in which you made the disposal (1 July – 30 June). So if you sell a property in March 2026, you report the gain in your 2025–26 tax return, due 31 October 2026. The tax is paid when you lodge (or when the ATO issues an assessment).
The one exception is if you’re a non-resident selling Australian property. A 15% withholding applies at settlement, though this may be adjusted when you lodge your return.
Generally no your main residence (the home you live in) is fully exempt from CGT under the main residence exemption. The full exemption applies if you’ve lived in the property as your main home for the entire time you owned it, didn’t use it to produce income, and it’s on land of 2 hectares or less.
Partial exemption applies if you rented it out for part of your ownership, if it was your home for part but not all of the ownership period, or if you claimed the 6-year absence rule. If any of these apply, only the non-exempt proportion of the gain is taxable.
The main exemptions are: your principal place of residence (with conditions), pre-CGT assets acquired before 20 September 1985, personal use assets where the item cost $10,000 or less (like your personal car or furniture), compensation for personal injury, and certain lottery winnings or gifts. Cars used purely for personal transport are also specifically excluded.
Note: a holiday home, investment property, shares, crypto, or any asset held for investment is not exempt just because it’s not your main home. Only assets that are specifically exempted by the tax law are excluded.
If you hold a CGT asset for more than 12 months before selling, you’re entitled to a 50% CGT discount meaning only half your capital gain is included in your taxable income. The other half is completely disregarded.
Example: $60,000 capital gain on shares held 18 months. With the discount: only $30,000 is taxable. At 32.5%: $9,750 tax + Medicare. Without the discount: $60,000 taxable = $19,500 tax + Medicare. The discount saves $9,750 on this single trade. It only applies to individuals, trusts and SMSFs (which get a 1/3 discount, not 50%). Companies don’t get it.
Yes this is critical and many investors skip it. You must report capital losses in your tax return for the year they occur, even if you have no capital gains to offset them against. This is how your carry-forward loss balance is established with the ATO. If you don’t report a loss when it happens, you may not be able to use it in future years without lodging an amendment. Report every loss, every year, even in zero-gain years. It takes 30 seconds and it’s worth it.
Property CGT FAQs
Cost base = purchase price + stamp duty + legal fees + any capital improvements (major renovations, new structures). Sale proceeds = sale price minus selling costs (agent commission, legal fees on sale). Capital gain = sale proceeds minus cost base. If held 12+ months, apply 50% discount. Add taxable gain to your income and apply marginal rate + 2% Medicare.
If you move out of your home and rent it out, you can treat it as your main residence for up to 6 years under the 6-year absence rule which means it stays CGT-exempt during that period. The 6 years resets if you move back in. There’s no limit on how many times you can do this.
However, you can only have one main residence at a time. If you buy a new home, the old one’s exemption period generally ends. And if you’re renting out your property and claiming it as your main residence under this rule, you can’t also claim a deduction for the interest on your mortgage at the same time (though you can claim other deductions).
Yes! for rental properties, depreciation you’ve claimed under Division 43 (building structure) reduces your cost base. This is called the “depreciation add-back” and it’s the most commonly missed CGT cost base issue for landlords. The short version: every dollar of building depreciation you’ve claimed over the years reduces your cost base by that much, increasing your eventual capital gain at sale.
When you inherit property, you generally don’t pay CGT at the time of inheritance it’s not a taxable event for the beneficiary. Your cost base for the inherited property is stepped up to the market value at the date of death (not the original purchase price). This is the “stepped-up cost base” and it’s one of the most significant tax advantages in Australian inheritance law.
When you eventually sell the inherited property, CGT is calculated on the gain from that stepped-up cost base not from what the deceased originally paid. The holding period for the 12-month discount starts from the date of death if the property was acquired on or after 20 September 1985.
CGT itself is a federal tax same rules and rates regardless of which state you’re in. NSW, VIC, QLD, WA, SA, TAS and ACT all apply the same federal CGT laws. However, state-specific taxes do affect your overall investment return and your cost base. Stamp duty (which varies significantly by state) is included in your cost base, so higher stamp duty states effectively have a lower net capital gain on the same property. Victorian land tax, for example, is not part of your CGT cost base but does affect your total return.
For property, the ATO uses the contract date (the date contracts are exchanged), not the settlement date. This matters a lot at EOFY. If you exchange contracts on 28 June 2026 but settle on 15 July 2026, your CGT event occurred in the 2025–26 financial year not 2026–27. The gain needs to be reported in your 2025–26 return, and you need to have the funds available to pay tax in that year even though settlement hasn’t occurred yet.
Shares & ETFs CGT FAQs
Yes and it’s the most commonly missed deduction for share investors. Brokerage you paid when buying shares is added to your cost base, reducing your eventual capital gain. Brokerage when selling reduces your sale proceeds. Both sides work in your favour. For frequent traders or investors who bought at multiple prices, the cumulative brokerage can be substantial always include it for every parcel.
When you’ve bought shares in the same company at different times or prices, each purchase is a separate “parcel” with its own cost base and its own 12-month holding period. When you sell, you can choose which parcel you’re selling. FIFO (first in, first out) is only the default when you haven’t identified a specific parcel. The ATO allows you to nominate specific parcels your choice is a record-keeping decision, not a trading instruction.
Yes! each Dividend Reinvestment Plan (DRP) acquisition creates a new parcel with its own cost base (the share price on the reinvestment date) and its own 12-month holding period clock. If you’ve been in a DRP for 5+ years, you could have 20+ separate parcels. The 50% discount applies to each parcel individually based on when that specific parcel was acquired.
ETFs are treated identically to direct ASX shares for CGT purposes your cost base is purchase price plus brokerage, the 50% discount applies after 12 months, and capital losses can be offset against gains. The one additional complexity is AMIT cost base adjustments, which Vanguard, iShares, BetaShares and others distribute annually. These adjustments change your cost base year by year and are shown on your annual tax statement. They’re worth tracking — they reduce your eventual capital gain.
Trade date the day you execute the buy or sell order. Unlike property, shares use the trade date, not the settlement date. This matters at EOFY: if you sell shares on 29 June (trade date), the CGT event falls in the 2025–26 financial year even if ASX T+2 settlement occurs on 1 July 2026. The gain is reported in your 2025–26 return. Keep this in mind if you’re planning any last-minute EOFY selling.
Crypto & Digital Assets
Yes and this is the most common CGT mistake in crypto. Swapping Bitcoin for Ethereum, or USDC for SOL, is a disposal of the first coin. The proceeds are the AUD value of what you received at the time of the swap. Every swap is a separate CGT event with its own gain or loss. It doesn’t matter that you never converted to Australian dollars the ATO’s rules apply to every disposal, in any form.
Staking rewards are taxed as ordinary income not CGT at your marginal rate + 2% Medicare. You pay income tax on the AUD value of each reward at the time it was received. There’s no 50% CGT discount on staking rewards. When you later sell the staked tokens, CGT then applies on any gain above the FMV at the time you received the reward (which becomes your cost base for those tokens).
Almost certainly yes, if you’ve used any AUSTRAC-registered Australian exchange. The ATO’s crypto data-matching program collects transaction records from Australian exchanges and cross-references them against tax returns. The program covers an estimated 1.2 million Australians with records going back to 2014–15. From 2026, Australia is also joining the OECD’s CARF framework, enabling automatic data sharing with international tax authorities on offshore exchange activity.
Airdrops are treated as ordinary income at the fair market value of the tokens on the date you received them. You pay income tax on that value in the year you receive the airdrop. Your cost base for those airdropped tokens then becomes that FMV so if you later sell them for more, CGT applies on the additional gain (FMV at receipt is your starting point, not zero). This prevents double taxation.
Capital Losses
Indefinitely there is no time limit on carrying forward a net capital loss in Australia. A loss from 2015 is just as usable in 2035 as it was the year it was made. The only conditions are: it must have been reported in your tax return in the year it occurred, and when you apply it, you use the oldest losses first. Keep original purchase records for as long as the loss remains unused, plus 5 years after it’s applied.
No! capital losses can only be applied against capital gains. They cannot reduce ordinary income like wages, salary, rental income, dividends or business profits. If you have more capital losses than capital gains in a year, the excess carries forward to future years. Capital losses are ring-fenced to capital gains only, which is why many investors with large carry-forward losses eagerly await a year when they have significant capital gains to release them against.
Yes selling investments at a loss to crystallise capital losses before 30 June (tax loss harvesting) is completely legal and widely practised by Australian investors and their accountants. The ATO built the capital loss system to recognise genuine losses on genuine disposals.
Losses come first always. The ATO’s mandatory order is: (1) apply current-year capital losses to the gross gain, (2) apply any carried-forward losses, (3) then apply the 50% CGT discount to whatever net gain remains. You cannot apply the discount first and then subtract losses. This order actually benefits investors more than people expect a $10,000 loss applied to a $30,000 gross gain (held 12+ months) produces a $10,000 taxable gain.
2026 Budget CGT Changes
The May 2026 Federal Budget announced that the flat 50% CGT discount will be replaced by cost-base indexation plus a 30% minimum tax rate from 1 July 2027. Under the new system, instead of halving your gain, your original purchase price is adjusted for inflation so only the “real” gain above inflation is taxed. A 30% minimum tax applies on that real gain regardless of your marginal rate. Check latest information from here.
Yes, with conditions. Assets purchased on or before 12 May 2026 (the Budget announcement date) are covered by grandfathering rules. The existing 50% discount continues to apply to gains accrued before 1 July 2027. From that date, gains accrue under the new indexation method. The transition is based on a time-apportionment approach you don’t lose the pre-2027 discount by selling after that date; it’s applied proportionally to the pre-2027 portion of the gain.
No. Superannuation funds including SMSFs are explicitly excluded from the changes. Super funds in accumulation phase retain the one-third CGT discount (resulting in an effective 10% tax rate on long-term gains). Pension-phase assets remain fully CGT-exempt. This makes superannuation even more attractive as an investment vehicle post-2027, particularly for members approaching retirement.
It depends on your individual situation there’s no universal answer. Selling before 1 July 2027 locks in the 50% discount on existing gains, but crystallises your tax liability now and ends your ownership (you’d need to reinvest). Holding through means the pre-2027 portion keeps the discount and only the post-2027 gains use the new indexation method which in some cases produces a similar or better outcome for long-term holders in lower brackets.
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