Capital Gains Tax Australia 2025: The Complete Guide to CGT on Shares, Property and Crypto

What Is Capital Gains Tax in Australia?

Capital Gains Tax (CGT) is not a separate tax in Australia. Rather, any capital gain you make from selling an asset is included in your assessable income for that financial year and taxed at your marginal income tax rate. This is an important distinction from countries like the UK or Canada, which have separate CGT rates.

A capital gain occurs when you sell a capital asset for more than it cost you. A capital loss occurs when you sell for less. Capital losses can only be offset against capital gains — you cannot use a capital loss to reduce your ordinary income (such as salary or wages). Unused capital losses can be carried forward indefinitely to offset future gains.

CGT applies to a wide range of assets acquired after 19 September 1985 — this date is known as the CGT commencement date. Assets acquired before this date are generally not subject to CGT.

The 50% CGT Discount — Australia's Most Valuable Tax Concession

If you are an Australian resident individual or trust and you have held an asset for more than 12 months before selling it, you are entitled to a 50% discount on your capital gain. This means only half of your net capital gain is included in your assessable income.

This is arguably the most generous tax concession available to everyday Australian investors, and it is one of the key reasons that long-term investing in shares and property is so tax-effective compared to short-term trading.

Who Gets the 50% Discount?

How to Calculate Your Capital Gain

The starting point is your cost base. This is not simply what you paid for the asset — it includes several components:

The Five Elements of Cost Base

1. Acquisition cost — What you actually paid for the asset
2. Incidental acquisition costs — Stamp duty, brokerage, legal fees, conveyancing costs paid when buying
3. Costs of ownership — Expenses of owning and maintaining the asset that were not deductible elsewhere (for non-income-producing assets only)
4. Capital improvements — Money spent on improving the asset (e.g. renovating an investment property)
5. Incidental disposal costs — Agent commissions, legal fees, and advertising costs paid when selling

Worked Example — Investment Property

Without the 50% discount, the tax would have been $70,300. The discount saves this investor $35,150.

CGT on Shares and ETFs

When you sell shares in Australian or international companies, ETFs, or managed funds, any gain is subject to CGT. Each parcel of shares you acquire is treated as a separate CGT asset with its own acquisition date and cost base.

The Identification Rules — Which Shares Did You Sell?

If you have multiple parcels of the same share purchased at different times and prices, you can choose which parcel you are deemed to have sold. This is a powerful tax planning tool. You might choose to:

• Sell the parcel with the highest cost base to minimise your gain
• Sell the parcel held for over 12 months to access the 50% discount
• Sell a parcel that produces a capital loss to offset other gains

Dividend Reinvestment Plans (DRPs)

If you participate in a dividend reinvestment plan, each reinvested dividend creates a new parcel of shares with its own acquisition date and cost base. Over many years, this can result in dozens or hundreds of separate parcels that need to be tracked for CGT purposes. Good record keeping is essential.

Corporate Actions

Takeovers, mergers, capital returns, share splits, and spin-offs can all have CGT implications. Many of these have specific CGT rollover provisions that allow you to defer the gain — but the rules are complex and vary by transaction. Always check the specific tax guidance issued by companies for major corporate events.

CGT on Investment Property

Investment property is one of the most significant CGT assets for Australian investors. Beyond the standard CGT calculation, several additional rules apply:

Depreciation Clawback

If you have claimed depreciation on the building structure or plant and equipment, this does not reduce your cost base — but it does reduce your cost base under the indexation method (which generally only applies to assets acquired before 1999). For assets acquired after September 1999, depreciation is simply a factor that reduces your tax deductions during ownership without directly adjusting cost base. However, the total depreciation claimed affects the calculation of building write-off.

Partial Main Residence Exemption

If you lived in your investment property at some stage, you may be entitled to a partial main residence exemption. The gain is apportioned based on the periods when the property was your main residence versus when it was rented out.

CGT on Cryptocurrency in Australia

The ATO has been clear since 2014: cryptocurrency is treated as property for tax purposes, not currency. Every time you dispose of cryptocurrency — whether by selling for Australian dollars, trading one coin for another, using crypto to buy goods or services, or gifting crypto — it is a CGT event.

Key Rules for Crypto Investors

• The 50% discount applies if you held the crypto for more than 12 months before disposing of it
• Each individual transaction is a CGT event — if you make 500 trades in a year, you potentially have 500 capital gains or losses to calculate
• Crypto-to-crypto swaps (e.g. exchanging Bitcoin for Ethereum) are taxable disposals, not currency exchanges
• The cost base of cryptocurrency is its AUD value at the time of acquisition
• The ATO uses data from cryptocurrency exchanges operating in Australia — they have data-matching programs with major exchanges

The Main Residence Exemption

Your family home (the property you live in as your principal place of residence) is fully exempt from CGT, provided you have lived there for the entire period of ownership. This is one of the most significant tax exemptions in the Australian tax system and is a key reason why owner-occupier residential property is such a tax-effective asset class for long-term wealth building.

Conditions for the Full Exemption

• You must have lived in the property as your main residence for the entire period you owned it
• It was not used to produce income at any time
• The land area is 2 hectares or less

The 6-Year Absence Rule

If you move out of your home but continue to treat it as your main residence, you can rent it out for up to 6 years and still claim the full main residence exemption when you sell — provided you do not treat any other property as your main residence during that time. This is one of the most valuable planning opportunities for homeowners who relocate for work.

Legal Strategies to Reduce Your CGT Bill

1. Hold assets for over 12 months — The single most impactful strategy. The 50% discount halves your taxable gain.
2. Time your sale at year end — If you are close to year-end, delaying a sale until after 30 June pushes the tax payment back by 12 months (and gives you time to earn less income in the new year if relevant).
3. Use capital losses strategically — If you have investments sitting at a loss, consider selling them before year-end to create capital losses that offset your gains.
4. Maximise your cost base — Ensure you include every legitimate expense in your cost base. Many investors forget to include stamp duty, legal fees, and minor capital improvement costs.
5. Contribute to super — Salary sacrificing into super reduces your taxable income, which reduces the rate at which your capital gain is taxed (since capital gains are taxed at your marginal rate).
6. Consider timing your income — If you are approaching retirement and your income will drop significantly, waiting to sell may mean your capital gain is taxed at a lower rate.