The 50% capital gains tax discount is one of the most valuable concessions in the Australian tax system. Hold an asset for long enough and only half your gain gets taxed. This guide explains exactly what the discount is, the 12-month rule that unlocks it, who qualifies and who doesn't, and the change that's coming in 2027.
What the 50% CGT discount is
When you sell an asset for more than it cost you, the profit is a capital gain, and it's added to your income and taxed. The 50% CGT discount lets eligible owners reduce that gain by half before it's taxed — so if you make a $20,000 gain on an asset you've held for more than a year, only $10,000 is added to your taxable income.
It isn't a separate "capital gains tax rate". Australia doesn't have one. The discounted gain is simply added to the rest of your income and taxed at your normal marginal rate. The discount has been part of the personal tax system since it replaced the old indexation method on 21 September 1999.
The 12-month rule
The discount only applies if you've owned the asset for at least 12 months before the CGT event (usually the sale). This is the single most important rule to get right, because being a day short means the discount is lost entirely and the full gain is taxed.
When counting the 12 months, you exclude both the day you acquired the asset and the day of the CGT event. In practice that means you need to hold the asset for a clear 12 months plus a day or two. Buying on 10 June one year and selling on 10 June the next is cutting it too fine; waiting until at least 12 June is safe.
Who qualifies — and who doesn't
The size of the discount depends on the type of taxpayer holding the asset:
- Individuals — Australian-resident individuals get the full 50% discount. This is the most common case: shares, an investment property, or crypto held in your own name.
- Trusts — trusts also get the 50% discount, generally applied before the net gain is distributed to beneficiaries.
- Complying super funds — get a reduced discount of one-third (33.33%), not half, reflecting the lower 15% tax rate that already applies to super.
- Companies — get no CGT discount at all. A company pays tax on the full gain at the company tax rate.
There's also a residency catch. Foreign and temporary residents generally can't claim the discount on gains that accrued after 8 May 2012, and the portion of a gain earned while you were a non-resident may not qualify.
How the discount is applied
The order of the calculation matters. You don't apply the discount to each sale in isolation — you work out your net position first:
- Add up all your capital gains for the year.
- Subtract any capital losses (including losses carried forward from earlier years). Losses come off before the discount.
- Apply the 50% discount to what's left, but only to the part made up of assets held for more than 12 months.
Applying losses first, then the discount, gives a better result than the other way around — which is exactly why the rules are written that way.
A quick worked example
Say you sold two parcels of shares this year. You made a $20,000 gain on shares held for three years, and a $4,000 loss on shares held for six months:
That $8,000 is then taxed at your marginal rate — it isn't a final tax bill on its own. If you'd sold the shares before reaching 12 months, the full $16,000 would have been added to your income instead.
The change coming in 2027
The 50% discount as we know it has an expiry date. In the May 2026 federal budget, the government announced that from 1 July 2027 the discount will be replaced for individuals, trusts and partnerships by two mechanisms working together:
- Cost-base indexation — instead of halving the gain, the asset's original cost is lifted in line with inflation, so you're taxed only on the "real" gain above inflation.
- A 30% minimum tax on gains — many capital gains will face an effective rate of at least 30%, regardless of your normal marginal rate. People on income support, such as pensioners, are exempt from the minimum.
Two protections survive the change. The family home stays fully exempt from CGT, untouched by any of this. And for an asset you already own on 1 July 2027, the gain is split: the part that built up before that date keeps the current 50% discount, and only the part after is taxed under the new rules.
Importantly, this is an announced budget measure, not yet law. It still has to pass Parliament, and the detail could change before it takes effect. Until 1 July 2027, the 50% discount continues to apply in full.
The bottom line
The 50% CGT discount halves the tax on long-held gains for individuals and trusts, drops to one-third for super funds, and doesn't apply to companies at all. The key is the 12-month rule — held a clear year and a day, and half the gain disappears from your tax. Just keep an eye on the 1 July 2027 changes if you're holding assets you might sell after that date, and use the CGT calculator to see where you stand under today's rules.