Capital gains tax in Australia is income tax on the profit you make when you sell or otherwise dispose of an asset. There is no separate rate and no separate return. You work out the gain, apply any exemption or discount you qualify for, and include the net amount in your income tax return for the year the CGT event happened.
This guide is for individuals, investors and small business owners who have sold, or are about to sell, property, shares, crypto or business assets, and who want to know what is taxable, what is exempt, and what records the ATO expects. It separates three questions that are easy to blur together: whether the asset is caught by the rules at all, how the taxable gain is calculated, and what evidence you need to support the figures.
The mechanics matter more than most summaries admit. The date on a contract, not the settlement date, usually fixes the income year. Holding an asset one day short of 12 months can cost you the 50% discount. Capital losses reduce gains before the discount is applied, not after, which changes the result. Your residency status can change whether an overseas asset is assessable in Australia.
Every rate, threshold and record requirement below reflects current ATO guidance. CGT outcomes depend on your own circumstances, so treat this as general information and confirm your position with the ATO or a registered tax agent before you lodge.
- CGT is not a separate tax in Australia. A net capital gain is added to your assessable income and taxed at your marginal rate, according to the ATO.
- A CGT event, usually a contract for sale, sets the income year the gain is reported, not the settlement date or the date you receive the money.
- Individuals and trusts who have held a CGT asset for at least 12 months may apply the 50% CGT discount; companies cannot.
- Your main residence is generally exempt, and assets acquired before 20 September 1985 sit outside the CGT rules.
- Cost base records, including purchase contracts, improvement invoices and brokerage statements, need to be kept for the whole time you own the asset.
Capital gains tax in Australia works by adding your net capital gain to your other assessable income for the year. The ATO explains that CGT is part of income tax rather than a standalone tax, so there is no fixed capital gains tax rate australia applies to gains. A gain is taxed at your marginal rate, which means the same $20,000 gain produces a very different bill for someone on a low income than for someone already in the top bracket.
The calculation runs in a set order: sale proceeds less cost base gives the gross gain, current year and carried forward capital losses reduce that gain, then any discount or small business concession applies to what is left.
Exemptions are asset based and taxpayer based rather than income based. The ATO treats a dwelling that is your main residence as generally exempt, assets you acquired before 20 September 1985 as outside the regime, personal use assets bought for $10,000 or less as exempt, and most cars and motorcycles as exempt. Super funds and certain not for profit entities have their own treatment.
CGT is not limited to Australian assets. Australian tax residents are assessable on worldwide capital gains, while foreign residents are generally assessable only on taxable Australian property such as real estate. Foreign residents also lost access to the main residence exemption for disposals from 1 July 2020 under the ATO's current rules, which is one of the more recent changes people ask about.
| Taxpayer type | Assets in scope | Discount available |
|---|---|---|
| Australian resident individual | Worldwide assets | 50% after 12 months |
| Company | Worldwide assets | No CGT discount |
| Foreign resident | Taxable Australian property only | Restricted, and no main residence exemption from 1 July 2020 |
You can legitimately reduce how much capital gains tax you pay by holding assets longer, timing disposals, and using losses. The ATO's 50% CGT discount is the largest single lever for individuals: if you are an Australian resident individual and you owned the CGT asset for at least 12 months before the CGT event, only half the remaining gain is assessable. Trusts also access the 50% discount; complying super funds get one third; companies get no discount at all.
Two practical details decide whether you actually get it:
- The 12 months is measured from the day after you acquired the asset to the date of the CGT event, so a contract signed at 11 months and 3 weeks fails.
- Capital losses are deducted from the gross gain first, and the discount applies to the reduced figure, which makes loss timing part of the calculation rather than an afterthought.
Deductible holding costs such as interest cannot be added to the cost base if you have already claimed them, so check your prior returns before recalculating. If you need to confirm how a rule applies to your own disposal, the ATO contact number for individual enquiries is 13 28 61, and the business line is 13 28 66. Some published lists circulate other numbers, including 1300650286, that are not ATO lines, so check the details on ato.gov.au before you call.
The main residence exemption removes capital gains tax on the sale of the dwelling you genuinely live in, provided the home is on land of two hectares or less and you have not used it to produce income. Partial use changes the result: if you ran a business from home or rented a room, the ATO apportions the gain by floor area and time.
Other exempt categories include pre 20 September 1985 assets, cars and motorcycles, depreciating assets used solely for taxable purposes, personal use assets acquired for $10,000 or less, and collectables acquired for $500 or less. The six year absence rule can extend main residence treatment while you rent the property out, but you can only treat one dwelling as your main residence at a time. Verify the current conditions on ato.gov.au or through an ATO phone number listed on the ATO website.
This is the income tax you pay on the profit from disposing of a capital asset, and for business owners the gains most often arise on the sale of business premises, goodwill or an ownership interest. A capital gains tax event on a business asset can be reduced by four small business CGT concessions under the ATO rules: the 15 year exemption, the 50% active asset reduction, the retirement exemption capped at a $500,000 lifetime limit, and the small business rollover.
Access depends on passing the basic conditions, which generally require either aggregated turnover under $2 million or net assets of $6 million or less, and the asset being an active asset used in the business. These concessions can stack with the general 50% discount, so a long held active asset can end up with a small assessable portion.
Operating costs are a separate question from capital gains. Our guide to small business deductions covers day to day expenses.
A CGT event happens when ownership of an asset changes or an asset is lost, destroyed or cancelled. The most common is A1, a disposal by sale or gift. Others include shares being cancelled or redeemed, an insurance payout for a destroyed asset, granting a lease, and ceasing to be an Australian resident, which triggers a deemed disposal of certain assets.
Timing follows the contract. For a sale under contract, the tax event date is the date the contract is entered into, not settlement. Without a contract, it is the date ownership changes. Searches about australia 2026 budget tax shares changes are common, but the ATO publishes the operative rules, and you should treat announcements as proposals until they are legislated and reflected on ato.gov.au.
You report a capital gain in the income year the CGT event occurred, and the tax becomes payable when your notice of assessment for that year falls due. A contract signed on 20 June 2025 that settles in August 2025 belongs in the 2024 to 2025 return, even though the money arrives in the next financial year. That mismatch is the single most common cash flow surprise for property sellers.
Two consequences are worth planning for. First, a June contract date can accelerate the liability by a full year compared with a July one. Second, a large gain can push you into a higher bracket and increase PAYG instalments for the following year. Commentary about tax changes shares investors may face, including speculation tied to australia 2026 budget tax shares changes, does not alter these timing rules unless legislation passes.
Rollovers let you defer a capital gain rather than remove it. The ATO provides replacement asset and restructure rollovers, including the small business restructure rollover, scrip for scrip rollover when your shares are exchanged in a takeover, marriage or relationship breakdown transfers, and involuntary disposals such as compulsory acquisition or an insurance payout on a destroyed asset.
Deferral has conditions and a tail. Under the small business replacement asset rollover you generally have two years to acquire a replacement active asset, and if you do not, the deferred gain is assessed. Scrip for scrip rollover carries your original cost base into the new shares, so later tax changes shares holders experience are measured from the older, lower base.
Before you commit to a structure, run a tax estimate on both paths, because deferral can simply move a larger gain into a year with less capacity to absorb it.
Timing and losses are the two levers you control without changing what you own. Because the tax rate australia applies is simply your marginal rate, the same gain realised in a year of lower income, parental leave or retirement can be taxed at a materially lower rate.
Practical steps that follow from the ATO rules:
- Check the 12 month holding period before signing anything, since crossing it halves the assessable gain for eligible individuals.
- Realise unused capital losses in the same income year as a gain. Capital losses only offset capital gains, never salary or business income, and they carry forward indefinitely.
- Sequence losses against undiscounted gains first, which preserves more of the discount on longer held assets.
Tax on capital gains shares generate can also be spread by disposing of parcels across two income years. Selling purely to create a loss and buying back immediately risks the ATO's anti avoidance rules.
Eligibility for relief turns on the asset and the owner: main residence, pre 1985 and personal use exemptions, the 50% discount after 12 months, and the small business concessions. Calculation follows a fixed order of proceeds, cost base, losses, then discount. Records must cover the entire ownership period. Deductit shows the ATO rule and formula behind each deduction calculation, so you can check the working. For advice on your own disposal, speak to the ATO or a registered tax agent.
How to avoid capital gains tax on property?
You avoid capital gains tax on property mainly through the main residence exemption, which applies to the dwelling you genuinely live in on land of two hectares or less that has not been used to produce income. The six year absence rule can preserve that treatment while the home is rented out, and the pre 20 September 1985 exemption covers older holdings. If the property was an investment, there is no exemption, but holding it for more than 12 months gives eligible individuals the 50% discount, and capital losses plus a full cost base including stamp duty, legal fees and capital improvements reduce the assessable gain. Foreign residents generally cannot use the main residence exemption for disposals from 1 July 2020.
How much capital gains do you have to pay on $300,000?
A $300,000 capital gain does not have a single tax figure, because it is added to your other income and taxed at your marginal rate. If the asset was held more than 12 months and you are an eligible individual, the 50% discount reduces the assessable amount to $150,000, and that $150,000 is then taxed at the marginal rates applying to your total income for the year. Capital losses come off the $300,000 before the discount, so a $50,000 loss leaves $125,000 assessable.
How much capital gains tax do you pay on $100,000?
A $100,000 gain follows the same method as any other capital asset disposal. Held more than 12 months by an eligible individual, $50,000 is assessable and taxed at your marginal rate, which depends on your salary, business income and other assessable amounts. Held for less than 12 months, the full $100,000 is assessable.
Is it 30%?
There is no 30% tax rate for individuals. Individuals are taxed at their marginal income tax rates, which range from nil in the tax free threshold to the top rate, plus Medicare levy. Companies are taxed at the company rate of 25% or 30% depending on whether they are a base rate entity, and companies receive no CGT discount.
How much it will I pay on $500,000 in Australia?
A $500,000 gain in Australia is taxed as part of your assessable income. An eligible individual who held the asset beyond 12 months would include $250,000 after the discount, and a gain of that size will usually push part of the amount into the top marginal bracket. Business owners may reduce it further through the small business concessions, including the retirement exemption up to the $500,000 lifetime limit, if the basic conditions are met.
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