CGT on Shares in Australia — Complete Guide

When you sell shares on the ASX (or internationally), any profit is a capital gain and is taxable in Australia. The key factor is how long you held the shares: assets held for more than 12 months qualify for the 50% CGT discount, which halves the taxable portion of the gain.

When Does CGT Apply to Shares?

A capital gains tax event occurs when you:

• Sell shares on the ASX or another exchange
• Transfer shares to another person (including as a gift)
• Cancel or redeem shares
• Have shares converted (e.g., a scheme of arrangement)
• Receive a return of capital that exceeds the cost base

Buying shares does not trigger CGT. CGT only applies when you dispose of the shares.

How to Calculate CGT on Shares

Step 1 — Establish the cost base:

• Purchase price (price per share × number of shares)
• Plus brokerage paid on purchase

Step 2 — Establish capital proceeds:

• Sale price (price per share × number of shares)
• Less brokerage paid on sale

Step 3 — Calculate the gain:

• Capital gain = Proceeds − Cost base

Step 4 — Apply the 50% discount (if held >12 months)

Example:

Parcel Selection — Which Shares Did You Sell?

If you have bought shares at different times and prices (multiple parcels), you must identify which parcels you sold. The ATO allows you to choose the most tax-effective identification method, provided you keep consistent records. Common strategies include:

• Sell older parcels first — more likely to qualify for the 50% discount
• Sell highest cost base parcels first — reduces the capital gain
• Sell parcels at a loss — to offset other gains

Your broker platform may not automatically optimise parcel selection for you — check your records carefully.

Dividend Reinvestment Plans (DRPs)

Each dividend reinvestment creates a new share parcel with its own acquisition date and cost base (the value of the shares received). These must be tracked separately for CGT purposes. Forgetting to include DRP parcels in the cost base is a common mistake.

Share Splits and Consolidations

• Share split (e.g., 1 share → 2 shares): The cost base is spread across the new shares proportionally. The acquisition date remains the same.
• Share consolidation (e.g., 10 shares → 1 share): Similar treatment — cost base is consolidated, acquisition date is unchanged.

Neither a split nor a consolidation triggers a CGT event by itself.

Shares Received as Salary or Employee Share Schemes (ESS)

Shares received under an employee share scheme (ESS) may have different cost base and timing rules — the point at which CGT is calculated depends on the type of scheme (upfront taxing point vs deferred). Generally:

• The cost base is the market value of the shares at the time they are included in your income (the “taxing point”)
• The 12-month holding period for the 50% discount starts from the taxing point, not when you received the shares

ESS rules are complex. If you have received shares or options under an employer scheme, a tax agent familiar with ESS is recommended.

International Shares

CGT applies to shares in foreign companies (e.g., US stocks on Nasdaq) in the same way as ASX shares. The difference is that:

• All values must be converted to AUD at the exchange rate on the date of each transaction
• Foreign withholding tax paid may be used as a foreign income tax offset (FITO) to reduce your Australian tax

Related Articles

• How to Calculate Capital Gains Tax
• The 50% CGT Discount
• CGT on ETFs
• CGT on Foreign Shares and US Stocks
• Capital Gains Tax Australia hub

Frequently Asked Questions

Do I pay CGT when I receive a dividend? No. Dividends are ordinary income, not capital gains. CGT applies when you sell (dispose of) the shares.

What if my shares went down in value and I sold at a loss? That is a capital loss. Capital losses reduce your capital gains and can be carried forward to future years. They cannot offset other income such as salary.

Do I need to report CGT if I didn’t sell any shares this year? No. CGT only arises when a CGT event occurs (typically a disposal). Merely holding shares does not trigger CGT, even if the value has increased significantly.

This article provides general tax information for FY2025–26. For advice tailored to your situation, speak with a registered tax agent or accountant. Find one through the Tax Practitioners Board register.