How capital gains tax works in Australia
Capital gains tax isn't a separate tax with its own rate. When you sell an asset for more than it cost you, the net capital gain is added to your taxable income for that year and taxed at your normal marginal rates. So the tax you pay on a gain depends on how much other income you earn — the same gain costs far more for a high earner than for someone on a low income.
The 50% CGT discount
If you're an individual and you owned the asset for more than 12 months before selling, only half of the gain is taxed — the other half is discounted entirely. This 50% discount is one of the most valuable features of the CGT system, and it's why holding an asset just past the twelve-month mark can make a real difference. Assets held for 12 months or less get no discount, and the whole gain is taxed.
Capital losses
If you sell an asset for less than it cost, you make a capital loss. Losses can't reduce your salary or other income — they can only offset capital gains. Importantly, losses are subtracted from your gains before the 50% discount is applied, which makes each dollar of loss more valuable. Any unused losses carry forward to future years until a gain absorbs them.
The cost base
Your gain is the sale price minus the cost base — and the cost base is more than just the purchase price. It also includes incidental costs of buying and selling, such as brokerage, legal fees and stamp duty, and certain ownership costs. A complete cost base means a smaller, more accurate gain.
What CGT applies to — and what's exempt
CGT applies to most investment assets: shares, managed funds, cryptocurrency, investment properties, and collectables above set thresholds. Some things are exempt — most importantly your main residence (the home you live in) is generally exempt, along with your personal car and assets bought before CGT began on 20 September 1985. This calculator assumes the asset is taxable and uses the standard discount method.
What's changing in 2027
In the May 2026 federal budget, the government announced that from 1 July 2027 the 50% CGT discount will be replaced by inflation-based cost-base indexation, alongside a new minimum 30% tax on capital gains. The family home stays fully exempt, and any gain that accrued before 1 July 2027 keeps the current 50% discount. This is an announced measure and is not yet law. This calculator covers financial years up to 2026–27, all of which fall under the current 50% discount rules.
Worked example: selling shares
Sara bought shares for $20,000 and sold them three years later for $50,000. Her other taxable income for 2025–26 is $80,000:
Shares: $20,000 → $50,000
Without the 50% discount — if Sara had sold within 12 months — the full $30,000 would be taxed, roughly doubling the tax to about $9,600.