Capital Gains Tax on Shares in Australia

When you sell shares in Australia for a profit, that profit is subject to capital gains tax (CGT). CGT isn’t a separate tax — the gain is added to your assessable income for the financial year and taxed at your marginal rate. If you’ve held those shares for at least 12 months, you’re eligible for a 50% CGT discount, which effectively halves the taxable gain before it hits your income. Getting this right at tax time can save you thousands.

General information only. This article does not constitute financial advice. Consider your own circumstances before making investment decisions.

How Capital Gains Tax on Shares Actually Works

When you dispose of shares — by selling them, gifting them, or transferring them — you calculate your capital gain by subtracting your cost base from the sale proceeds.

Capital gain = Sale proceeds − Cost base

Your cost base isn’t just what you paid for the shares. It also includes:

• Brokerage fees paid when you bought the shares
• Brokerage fees paid when you sold the shares
• Any incidental costs (e.g. legal fees for a corporate action)

So if you bought 200 CommBank (CBA) shares at $120 each ($24,000) and paid $9.95 brokerage each way, your cost base is $24,019.90. If you sold for $30,000, your gross capital gain is $5,980.10 — not $6,000.

The 12-Month CGT Discount: The Most Important Rule

Hold shares for at least 12 months before selling and you qualify for the 50% CGT discount as an individual. That means only half the capital gain is added to your taxable income.

Example:

• You buy $10,000 worth of shares in July 2025
• You sell in August 2026 for $15,000 — a $5,000 gain
• With the 50% discount, only $2,500 is added to your taxable income
• At a 34.5% marginal rate (including Medicare), you’d pay $862.50 in tax on that gain

Without the 12-month rule, the same gain would cost you $1,725. Timing a sale to cross the 12-month mark is one of the most straightforward and legitimate tax strategies available to Australian share investors.

Companies and super funds have different rules. Companies get no CGT discount — they pay tax on 100% of the gain at the corporate rate (currently 25% for base-rate entities). Super funds in accumulation phase get a one-third discount (equivalent to a CGT rate of 10%).

Offsetting Capital Losses

Capital losses can be offset against capital gains in the same financial year. If your losses exceed your gains, you can carry the excess losses forward indefinitely — they don’t expire.

Say you sold Zip Co shares at a $3,000 loss and BHP shares at a $5,000 gain in the same year. You’d only be taxed on the net $2,000 gain (then halved if you qualify for the discount).

One thing to watch: the ATO pays close attention to wash sales — where investors sell shares to crystallise a loss and immediately rebuy the same shares to get back their position. If the ATO determines the arrangement lacks genuine commercial purpose, it can disallow the loss. Legitimate tax-loss harvesting means actually changing your position, not just cycling through the same stock.

What You Need to Report

At tax time, every CGT event needs to be reported in your tax return. You’ll need:

• Trade confirmations or CHESS statements showing buy and sell dates and prices
• Brokerage costs from each transaction
• Your holding period confirmed (12 months or more for the discount)

Most Australians using platforms like CommSec, Stake, or Pearler can download a consolidated CGT report directly from the platform. If you’re using a US-based platform like Interactive Brokers, you’ll need to convert all amounts to AUD using the ATO’s published exchange rates for the transaction dates.

You can lodge via ATO myTax (it has a dedicated CGT section), or use a tax agent if your portfolio is complex — particularly if you hold ETFs, which have their own distribution components to account for.

Superannuation and CGT

Shares held inside super are worth mentioning. In the accumulation phase, your fund pays a maximum 15% tax on contributions and income, with a one-third CGT discount applying (so 10% effective CGT rate on gains from assets held 12+ months). Once you’re in pension phase and drawing a retirement income stream, the tax rate on earnings — including capital gains — drops to zero. This makes super a powerful environment for long-term share investing.

Frequently Asked Questions

Do I pay CGT when I receive dividends?

No. Dividends are treated as ordinary income, not capital gains. CGT only applies when you dispose of an asset — such as selling, gifting, or transferring shares. If the dividends include a franking credit, you declare the grossed-up dividend and claim the franking credit offset.

What happens with shares I received through an employee share scheme?

Shares acquired through employee share schemes (ESS) have specific rules. The discount or benefit you received when you got the shares is generally taxed as income at the time of grant or vesting. After that, any further gain from the time you were taxed is subject to the normal CGT rules, including the 12-month discount if applicable.

Can I claim a capital loss on shares that are now worthless?

Yes, but only if the shares have been formally declared worthless by the company or you have been formally released from them. You can’t claim a capital loss just because your shares have dropped in value — the loss is only crystallised when you actually dispose of them. Check the ATO’s guidance on “abandoned” assets if your shares are in a company that has been delisted or wound up.