Capital Gains Tax on Shares in Australia 2026 — Complete Guide

How CGT on Shares Actually Works

Australia has no separate capital gains tax rate. When you sell shares for more than their cost base, the net capital gain is simply added to your assessable income for that financial year and taxed at your marginal rate, plus the 2% Medicare levy where it applies. That means the same $10,000 gain can cost a part-time worker nothing and a high earner $4,700 — your other income in the year of sale is the single biggest driver of the tax bill.

The CGT event happens on the date you enter the contract to sell — for ASX trades, the trade date, not the T+2 settlement date. This matters most in late June: a sale placed on 29 June 2026 lands in the 2025–26 tax year even though the cash arrives in July.

The 50% CGT Discount — The Rule Worth the Most Money

If you are an individual (or a trust) and you have held the shares for more than 12 months before selling, only half of the gain is taxable. Companies do not get the discount, which is one reason holding growth assets inside a company structure is often tax-inefficient. The 12 months is measured from acquisition date to the date of the CGT event, and it must be strictly more than 12 months — selling on the anniversary date itself misses the discount.

Order of operations matters and is fixed by law: you apply current-year and carried-forward capital losses first, against the gross gain, and only then apply the 50% discount to what remains. You cannot choose to apply losses against non-discountable gains after discounting — although if you have both discountable and non-discountable gains, you can choose which gains to absorb the losses, and it is usually best to offset losses against short-held (non-discount) gains first.

What Counts in Your Cost Base

Your cost base is more than the purchase price. It includes:

• The amount paid for the shares
• Brokerage on purchase (added to cost base)
• Brokerage on sale (reduces capital proceeds)
• Certain incidental costs of acquisition and disposal, such as stamp duty on older transactions

Every parcel you buy — including every dividend reinvestment plan (DRP) allotment — is a separate asset with its own acquisition date and cost base. A DRP parcel's cost base is the dividend amount applied to acquire it, and its own 12-month discount clock starts on the allotment date. Ten years in a DRP can mean forty separate parcels; broker or registry tax reports (CommSec, SelfWealth, Computershare) do most of this bookkeeping, but you are responsible for the numbers on your return. Keep contract notes and dividend statements — the ATO requires records for at least five years after the sale.

Where you have bought the same stock at different times, you can generally choose which parcel you are selling (specific identification) rather than defaulting to first-in-first-out. Selling the parcel with the highest cost base, or the one that clears 12 months, can meaningfully change the result — just keep records showing which parcel you nominated.

Worked Example: $20,000 Gain, $90,000 Salary

Say you earn $90,000 and sell shares held for 18 months, realising a $20,000 gain (after brokerage). Because you held for more than 12 months, the 50% discount applies: taxable gain is $10,000. Your income of $90,000 sits in the 30% bracket ($45,001–$135,000 under the 2025–26 rates), and adding $10,000 keeps you inside it. Tax on the gain is 30% plus 2% Medicare levy = 32%, or about $3,200. Without the discount — say you sold at 11 months — the full $20,000 would be taxable and the bill would be roughly $6,400.

Capital Losses: Your Only Deduction Against Gains

Capital losses on shares can only offset capital gains — never salary, business or rental income. But they are surprisingly powerful because they never expire: unused losses carry forward indefinitely until you have gains to absorb them. Losses from any asset class offset gains from any other, so a crypto loss can shelter a share gain and vice versa. If you are carrying losses from earlier years, declare them on each return so they stay on record.

Wash Sales: Where Loss Harvesting Goes Wrong

Selling a losing position before 30 June to realise the loss is legitimate tax planning — provided you are genuinely changing your position. What the ATO objects to is the wash sale: selling shares primarily to crystallise a capital loss and then immediately buying back the same (or substantially the same) holding so your economic exposure never really changed. Taxation Ruling TR 2008/1 sets out the Commissioner's view that the general anti-avoidance rules in Part IVA can apply to these arrangements, and the ATO has issued repeated pre-June-30 warnings, including on sell-and-rebuy patterns routed through a spouse, trust or SMSF.

There is no fixed safe-harbour waiting period in Australian law, unlike the US 30-day rule. Practical risk reduction: leave a genuine gap before repurchasing, buy a different (even if similar) asset instead, or be able to show a real non-tax reason for the trade. If the only purpose of the round-trip was the deduction, the loss can be denied and penalties can apply.

Timing Strategies That Legally Reduce CGT

1. Hold past the 12-month line

The single most valuable move. If you are close to 12 months and the investment case hasn't changed, waiting a few weeks halves the taxable gain, as the example above shows.

2. Realise gains in a low-income year

Because gains are taxed at your marginal rate, the year you sell matters as much as what you sell. Taking a break from work, parental leave, retirement, or a year with a large deductible contribution can drop a gain from the 37% or 45% bracket into 30% or below. Someone with no other income could realise around $18,200 of taxable gains tax-free under the tax-free threshold.

3. Offset with losses in the same year

If you are sitting on genuine losers you no longer want, selling them in the same financial year as a large gain reduces the net gain dollar-for-dollar — before the discount is applied. Just keep the wash-sale principles above in mind.

4. Superannuation and the pension phase

Assets held inside super are taxed at a maximum of 15% on gains (10% effective after the one-third discount for assets held over 12 months) — and once your fund moves into retirement (pension) phase, gains on assets supporting the pension are taxed at zero. For long-horizon investors this is the largest CGT concession in the system, subject to contribution caps and the transfer balance cap.

Franking Credits Are a Separate System

Don't confuse dividend franking with CGT — they never interact. Franking credits attach to dividends and offset tax on your dividend income (with refunds possible for low-rate taxpayers); they cannot reduce the tax on a capital gain. A fully franked dividend paid just before you sell doesn't change the CGT calculation, although a large dividend can reduce the share price and hence the size of your gain.

ETFs: Same Rules, Extra Paperwork

ETFs follow the same CGT rules — including the 50% discount — but most Australian ETFs are trusts that pass capital gains through to unitholders each year even if you never sold a unit. These distributed gains appear on your annual AMMA tax statement and are among the most commonly missed items on Australian returns. Distributions reinvested and "attribution" adjustments under the AMIT rules also adjust your cost base, so keep every annual statement until well after you sell.

Frequently Asked Questions

Do I pay CGT every year I hold shares?

No — CGT is only triggered by a CGT event such as a sale, certain corporate actions, or ceasing Australian tax residency. Holding shares creates no CGT; dividends are ordinary assessable income, not capital gains.

Can I offset share losses against my salary?

No. Capital losses only offset capital gains. If your losses exceed your gains this year, the excess carries forward indefinitely to offset future gains.

Can I sell shares at a loss and buy them straight back?

You can, but if the dominant purpose is to manufacture a tax loss while keeping your exposure, the ATO can apply Part IVA (see TR 2008/1) and deny the loss. Genuine repositioning, a real gap in time, or switching to a different asset are much safer.

How are DRP shares treated when I sell?

Each DRP allotment is its own parcel with its own acquisition date and cost base (the dividend applied). When you sell, each parcel is assessed separately for the 12-month discount, so a single sale can produce both discounted and non-discounted gains.

Do companies get the 50% CGT discount?

No. The discount is available to individuals and trusts (and, at one-third, to complying super funds). Companies pay tax on the full gain at the company rate.

Related guides: CGT on cryptocurrency in Australia 2026 and How to reduce CGT on an investment property.