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Beginner · Lesson 1 of 4Capital gains tax basics
In Australia, selling an investment for more than its cost base creates a capital gain, which is added to your taxable income. If an individual or trust has held the asset for at least 12 months, the gain can generally be discounted by 50% (one-third for complying super funds). Companies get no discount.
Capital losses can offset capital gains (but not your salary) and unused losses carry forward. The cost base includes brokerage. Selling losers before 30 June to offset gains is common, but a "wash sale" (selling and quickly rebuying mainly for the tax benefit) can be disallowed by the ATO.
Which parcel you sell matters if you bought at different times and prices; keep good records. The ATO receives data from brokers and share registries.
Key takeaways
- Hold 12+ months for the 50% CGT discount (individuals).
- Losses offset gains, not salary; they carry forward.
- Wash sales can be disallowed.
Check your understanding
1. An individual sells shares held for 2 years with a $10,000 gain. Typical taxable amount after the discount?
- $0
- $5,000
- $6,667
- $10,000
Show the answer
$5,000. 50% discount applies after 12 months.
2. Can capital losses reduce tax on your salary?
- Yes
- No, only capital gains
- Only in super
- Only for crypto
Show the answer
No, only capital gains. Capital losses only offset capital gains.
Go deeper
- Wikipedia: Capital gains tax in Australia
- YouTube videos: capital gains tax australia shares explained
- Investopedia: capital gains tax
- ATO: CGT discount
- ATO: wash sales
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