Australian CGT Guide 2025-26: The 50% Discount, Shares & Investment Property

Australia doesn't have a separate Capital Gains Tax rate — capital gains are included in your assessable income and taxed at your marginal rate. What makes the system unique is the 50% CGT discount: if you hold an asset for more than 12 months before selling, you only include half the gain in your taxable income. For a 45% top-rate taxpayer, that means an effective CGT rate of 22.5% on long-term gains.

The 50% CGT Discount

The key rule: hold the asset for more than 12 months from purchase to sale date, and you can discard 50% of the capital gain before it's added to your income. This applies to individuals and trusts — companies do NOT get the discount.

CGT on Shares

Shares are a CGT asset. Each parcel (batch) of shares purchased has its own cost base. Key rules:

• Cost base includes the purchase price plus brokerage fees.
• Dividends received are income, not capital — they don't affect the cost base.
• Dividend reinvestment plans (DRPs): each reinvested dividend creates a new parcel with the reinvestment price as the cost base.
• Share splits or consolidations adjust the cost base proportionally — no CGT event occurs.
• The ATO requires you to identify which parcel you're selling. Most people use FIFO (first in, first out) as a default, but you can choose to maximise the discount or minimise gains.

CGT on Investment Property

Investment properties are subject to CGT (your main residence is generally exempt via the Main Residence Exemption). Cost base for property includes:

• Purchase price + stamp duty + legal fees
• Capital improvements (new room, renovation — not repairs)
• Costs of ownership NOT claimed as deductions (e.g. if you took the 50% discount method, you can't also use indexation)

The 50% discount applies to investment property held more than 12 months. If you've claimed depreciation on the property under Division 43 (building allowance) or Div 40 (plant and equipment), the depreciation claimed reduces your cost base — so you can't double-dip.

Worked Example — Investment Property

CGT on Cryptocurrency

The ATO treats cryptocurrency as a CGT asset (property), not currency. Each transaction is a CGT event:

• Selling crypto for AUD: CGT event — gain or loss on each coin.
• Trading crypto for other crypto: CGT event — you dispose of one asset and acquire another.
• Using crypto to buy goods/services: CGT event.
• Staking rewards and airdrops: ordinary income when received (not CGT).

The 50% discount applies to crypto held more than 12 months. Record keeping is critical — you need purchase price, date acquired, sale price, date sold for every transaction.

Main Residence Exemption

Your family home is generally fully exempt from CGT if it has been your main residence throughout your ownership period. Partial exemptions apply if:

• You rented out part or all of the home at any point.
• You used part of the home exclusively for business.
• There was a period it was not your main residence (e.g. you lived elsewhere for work).

The "6-year rule" allows you to treat a property as your main residence for up to 6 years while renting it out, provided you don't claim another property as your main residence in that period. This is one of the most powerful tax strategies for property investors.

Capital Losses

Capital losses in Australia can only offset capital gains — not ordinary income. Unused losses carry forward indefinitely. The 50% discount is applied after offsetting losses (losses reduce the full gain first, then you halve what remains).

Source: ATO.gov.au, ITAA 1997. FY 2025-26. Not financial or tax advice. Consult a registered tax agent for individual circumstances.