To calculate capital gains tax (CGT) in Australia, you subtract the cost base from the capital proceeds, apply any capital losses, then — if you held the asset for more than 12 months — apply the 50% CGT discount. The result is added to your taxable income and taxed at your marginal rate.
Step-by-Step CGT Calculation
Step 1: Determine Your Capital Proceeds
Capital proceeds are what you received for the asset. This is usually the sale price, but if you gifted the asset or sold it below market value, the ATO generally uses market value as the proceeds.
Step 2: Calculate Your Cost Base
The cost base is what you paid for the asset, plus eligible costs:
| Cost Base Component | Examples |
|---|---|
| Purchase price | Amount paid for the asset |
| Incidental acquisition costs | Stamp duty, legal fees, broker commissions, transfer fees |
| Improvement costs | Renovations, capital works (not repairs) |
| Ownership costs | Costs of owning the asset that were not deducted elsewhere (relevant for non-income-producing assets) |
| Incidental disposal costs | Agent commissions, legal fees on sale |
Note: Costs you have already claimed as a tax deduction cannot be included in the cost base.
Step 3: Calculate the Gross Capital Gain or Loss
Capital gain = Capital proceeds − Cost base
If the result is negative, you have a capital loss.
Step 4: Apply Capital Losses
Offset capital losses against capital gains — current year losses first, then prior year carry-forward losses. Apply losses before the 50% discount.
Example:
- Capital gain from shares: $20,000
- Capital loss from crypto: $4,000
- Net gain: $16,000
Step 5: Apply the 50% CGT Discount (if eligible)
If you held the asset for more than 12 months and you are an individual or trustee (not a company or superannuation fund), reduce the net capital gain by 50%.
- Net gain after losses: $16,000
- 50% discount: $8,000
- Taxable capital gain: $8,000
Super funds receive a one-third (33.3%) discount, not 50%.
Step 6: Add to Taxable Income and Calculate Tax
The taxable capital gain is included in your assessable income and taxed at your marginal rate.
Example continued:
- Other taxable income (salary): $80,000
- Taxable capital gain: $8,000
- Total taxable income: $88,000
- Income tax at $88,000 (FY2025–26): approximately $19,717 (including Medicare levy)
CGT Calculation Example (Full Worked Example)
| Item | Amount |
|---|---|
| Purchase price of shares | $15,000 |
| Brokerage on purchase | $20 |
| Cost base | $15,020 |
| Sale proceeds | $32,000 |
| Brokerage on sale | $20 |
| Capital proceeds | $31,980 |
| Gross capital gain | $16,960 |
| Capital loss carried forward | ($2,000) |
| Net capital gain | $14,960 |
| 50% discount (held 2 years) | ($7,480) |
| Taxable capital gain | $7,480 |
CGT and the Indexation Method
Before 21 September 1999, the indexation method applied — the cost base could be indexed for inflation (using CPI) and no discount applied. Since then, most individuals use the discount method because it is more beneficial. You can choose which method to use, but you cannot use both on the same asset.
For assets acquired before 21 September 1999 and held for more than 12 months, you can choose:
- Discount method: 50% discount on the nominal gain, OR
- Indexation method: Inflate the cost base using the CPI index to the September 1999 quarter
Related Articles
- Capital Gains Tax Explained — what CGT is and when it applies
- Cost Base Explained — full detail on what counts as cost base
- The 50% CGT Discount — qualifying rules and how to apply it
- Capital Gains Tax Australia hub
Frequently Asked Questions
How do I calculate CGT on shares in Australia? Subtract what you paid for the shares (including brokerage) from what you received (less brokerage). Apply any capital losses, then halve the gain if you held the shares for more than 12 months. The result is added to your taxable income.
Do I calculate CGT on the full sale price? No. CGT applies to the gain — the difference between your cost base and your capital proceeds. You are not taxed on the full sale amount.
What if I have both a capital gain and a capital loss this year? Offset the loss against the gain first. If the net result is still a gain, apply the 50% discount (if eligible). If the net result is a loss, carry it forward to future years.
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.