Capital Gains Tax Australia — Complete CGT Guide

Capital gains tax (CGT) is not a separate tax in Australia — it is part of your income tax. When you sell an asset for more than you paid for it, the profit (the capital gain) is included in your assessable income for that year and taxed at your marginal rate. The critical difference is the 50% discount: if you held the asset for more than 12 months, only half the gain is taxable.

Understanding CGT is essential for anyone who invests in shares, property, or crypto. This cluster covers the rules from the ground up — how to calculate a gain, which assets are affected, the main exemptions, and the record-keeping you need to support every claim.

How CGT Works

• Capital Gains Tax Australia — Complete Guide — What triggers a CGT event, how capital gains are included in your tax return, and the role of capital losses
• How to Calculate Capital Gains Tax — Step-by-step: establish the cost base, determine the proceeds, apply the 50% discount, offset any capital losses
• Cost Base Explained — What counts as the cost base (purchase price, stamp duty, legal fees, improvement costs) and what does not
• The 50% CGT Discount for Individuals — Who qualifies (individuals and trusts, not companies), the 12-month holding requirement, and how it interacts with capital losses
• CGT Record-Keeping Requirements — What records you must keep, for how long (generally 5 years after you dispose of the asset), and what counts as evidence

CGT on Specific Asset Types

• CGT on Shares in Australia — When you trigger CGT by selling ASX shares, ETFs, or international stocks, and how franking credits interact
• CGT on Investment Property — The main residence exemption, the partial exemption when a home was also rented, and the six-year absence rule
• CGT on Cryptocurrency — ATO Rules — Why the ATO treats crypto as a CGT asset (not currency), what counts as a disposal, and how to value transactions in AUD
• CGT on Foreign Shares and US Stocks — Buying and selling via international brokers, currency conversion at each transaction date, and foreign income tax offsets
• CGT on ETF Distributions and Sales — The difference between income distributions (taxable as income) and selling units (CGT event)

Exemptions and Concessions

• CGT Exemptions and Concessions — The main residence exemption, cars, personal use assets under $10,000, and compensation payments
• Main Residence CGT Exemption — Full exemption for your principal place of residence, the conditions that must be met, and when you lose the exemption
• The Six-Year CGT Absence Rule — How you can rent out your former home for up to six years and still claim the full main residence exemption
• Partial Main Residence Exemption — How to calculate the taxable portion when a property was both your home and an investment
• CGT When You Convert Your Home to a Rental — The deemed disposal rules, valuation at the time of conversion, and the six-year election
• Small Business CGT Concessions — The 15-year exemption, 50% active asset reduction, retirement exemption, and rollover for eligible small businesses

Advanced Topics

• CGT and Deceased Estates — The CGT rules for inherited assets: cost base reset, the two-year period, and main residence exemption for deceased estates
• CGT and Relationship Breakdown — Rollover relief when transferring assets between spouses on separation or divorce under a court order
• Tax-Loss Harvesting in Australia — Deliberately realising capital losses to offset gains, the wash-sale risk, and year-end timing considerations

CGT in Practice — A Worked Example

An individual bought $10,000 worth of a Vanguard ETF (VAS) in August 2022 and sold it for $16,000 in November 2024:

1. Capital gain = $16,000 – $10,000 = $6,000
2. Held more than 12 months? Yes (over 2 years) → 50% discount applies
3. Discounted capital gain = $6,000 × 50% = $3,000
4. Added to taxable income for FY2024–25
5. At a 32.5% marginal rate, tax on the $3,000 gain = $975

If the same asset were sold less than 12 months after purchase, the full $6,000 would be assessable — tax of $1,950 at 32.5%. The 12-month holding rule saves $975 on this relatively small gain.

Capital Losses — How They Work

Capital losses can only offset capital gains — they cannot reduce ordinary income. If you have a net capital loss after offsetting gains, the loss is carried forward indefinitely to offset future capital gains.

Example:

• Sold CBA shares: $5,000 gain
• Sold a speculative crypto position: $8,000 loss
• Net capital loss: $3,000 (carried forward — cannot apply against salary income)
• Next year you realise a $4,000 gain: apply $3,000 carried-forward loss → taxable gain $1,000

Year-end tax-loss harvesting (deliberately realising underperforming positions to offset gains) is a legitimate tax strategy — but must be done carefully. The ATO watches for wash-sale arrangements where an asset is sold at a loss and immediately repurchased.

CGT and Your Tax Return

Capital gains are reported on your Australian tax return in the Capital gains section of your income. You will need:

• The date of purchase and sale of each asset
• Purchase price (including brokerage, stamp duty, legal fees for the cost base)
• Sale price (net of brokerage)
• Records of all transactions (bank statements, brokerage statements)

The ATO pre-fills some CGT data from ASX-listed share transactions — but this is not always complete. Crypto transactions are not pre-filled. Rental property CGT events must always be manually entered.

CGT Rate Comparison — Individual vs Super vs Company

Super fund pension phase offers the most favourable CGT treatment of any structure available to most Australian investors.

Frequently Asked Questions

Does the CGT 50% discount apply to my home?

No — if your home qualifies as your principal place of residence, it is fully exempt from CGT (the main residence exemption). The 50% discount is irrelevant in that case because there is no CGT at all. However, if your home was only partially your principal residence (e.g., you rented part of it or used it for business), a partial exemption and the 50% discount interact.

Do I pay CGT every year on my ETF holdings?

No — CGT is only triggered when you sell (or otherwise dispose of) an asset. Holding an ETF that has grown in value does not trigger CGT. Regular ETF distributions (dividends and income distributions) are assessed as income — but capital gains events only occur on disposal. Some ETFs also distribute realised capital gains as part of their annual distribution, which creates a taxable event without a sale.

Can a trust pass through the 50% CGT discount to beneficiaries?

Yes — discretionary trusts (family trusts) can distribute capital gains to individual beneficiaries along with the 50% discount. This is one of the reasons trusts are used in Australian investment and business structures. The beneficiary includes their share of the discounted gain in their own tax return.

CGT Records and the Cost Base

Calculating capital gains requires knowing your cost base — the total amount you paid for the asset, including:

• Purchase price
• Stamp duty on purchase
• Conveyancing or legal costs on purchase
• Improvements and capital expenditure (not repairs)
• Costs of sale (agent’s commission, legal fees)

Common cost base mistakes:

• Forgetting to include stamp duty (adds $15,000–$50,000 to cost base for property purchases)
• Not keeping records of capital improvements (kitchen renovations, extensions) which reduce CGT payable on sale
• Not tracking the original cost base for inherited assets (which is the market value at date of inheritance or the deceased’s original cost base, depending on when the asset was purchased)

You must keep CGT records for the entire time you own the asset plus 5 years after the CGT event. The ATO can request these records at any time during that period.

CGT and Cryptocurrency

Cryptocurrency is treated as a CGT asset in Australia — not currency. The ATO views each disposal (sale, trade, or use of crypto to buy goods) as a CGT event. Key implications:

• Gains on crypto held over 12 months qualify for the 50% CGT discount
• Losses can offset gains in the same or future years
• Records must be kept for every transaction (date, AUD value at acquisition and disposal)
• The ATO receives transaction data from Australian crypto exchanges (Coinbase, Swyftx, CoinSpot) and cross-matches with tax returns

This section provides general tax information. CGT rules are complex and depend on your individual circumstances. For advice tailored to your situation, speak with a registered tax agent. Find one through the Tax Practitioners Board register.