What Is Capital Gains Tax (CGT)?
Capital Gains Tax (CGT) in Australia is the tax you pay on the profit made when you sell an asset, such as property, shares, cryptocurrency, or business assets. CGT is not a separate tax — instead, your capital gain is added to your taxable income for the financial year and taxed at your normal marginal rate.
One of the most important CGT benefits is the 50% CGT discount. If individuals or trusts hold an asset for more than 12 months, only half of the capital gain is taxed. This single rule can reduce your CGT bill dramatically and is one of the most powerful tax concessions available in Australia.
Understanding how CGT works in 2026 is more important than ever, with increased ATO data-matching, tighter crypto reporting, and evolving superannuation rules.
Quick Summary: Capital Gains Tax in Australia
- CGT applies when you sell assets like property, shares, crypto, or business assets
- Capital gains are taxed at your marginal income tax rate
- A 50% discount applies after 12 months (individuals & trusts)
- Main residence and small business concessions can reduce or eliminate CGT
- Smart timing and ownership structure can legally lower your tax bill
When Do You Pay Capital Gains Tax?
You trigger CGT when a CGT event occurs. This usually means selling an asset, but it doesn’t always involve receiving cash.
Common CGT events include:
- Selling an investment property
- Selling or switching shares or managed funds
- Trading, selling, or swapping cryptocurrency
- Selling business assets
- Gifting or transferring assets to someone else
- Receiving insurance payouts for damaged or destroyed assets
In most cases, CGT applies at market value, even if no money changes hands.
What Assets Are Exempt from Capital Gains Tax?
Not all assets are subject to CGT. Some of the most common exemptions include:
- Your main residence (in most cases)
- Cars and motorcycles
- Personal-use assets valued under $10,000
- Collectables valued under $500
- Assets acquired before 20 September 1985
The main residence exemption is especially valuable and can fully eliminate CGT when you sell your family home, provided eligibility conditions are met.
How Is Capital Gains Tax Calculated?
CGT is calculated in four simple steps:
1. Work out your capital gain
Sale price minus the asset’s cost base (purchase price plus eligible costs such as stamp duty, legal fees, and capital improvements).
2. Apply the 50% CGT discount
If the asset was held for more than 12 months, individuals and trusts reduce the gain by 50%.
3. Add the gain to your income
The discounted capital gain is added to your taxable income.
4. Apply your tax rate
The gain is taxed at your marginal income tax rate.
Example:
You purchased an investment property for $400,000 in 2020.
Eligible costs total $60,000.
You sell the property in 2026 for $700,000.
- Sale price: $700,000
- Total cost base: $460,000
- Capital gain: $240,000
Because the property was held for more than 12 months:
- Discounted taxable gain: $120,000
This $120,000 is added to your income and taxed at your marginal rate.
What Are the Capital Gains Tax Rates in 2026?
Capital gains are taxed at standard income tax rates, depending on your total income.
Individuals
- Marginal tax rates range from 19% to 47%
- With the 50% CGT discount, the effective CGT rate is roughly 9.5% to 23.5%
Other entities
- Companies: 25%–30% (no CGT discount)
- Superannuation funds: 15%, or 10% on discounted gains
- Super funds in pension phase: 0% (tax-free)
Key CGT Exemptions That Can Save You Money
Main Residence Exemption
Your home is usually CGT-free. If you rent it out, you may still qualify for a full or partial exemption.
The 6-year rule allows you to rent out a former home for up to six years without losing the exemption, provided you do not nominate another main residence during that time.
Small Business CGT Concessions
Eligible small business owners may access powerful concessions, including:
- 15-year exemption: 100% CGT-free if conditions are met
- 50% active asset reduction: Additional reduction on top of the standard discount
- Retirement exemption: Up to $500,000 tax-free (lifetime limit)
- Rollover relief: Defer CGT when replacing business assets
When applied correctly, these concessions can eliminate CGT entirely.
What’s New for Capital Gains Tax in 2026?
Superannuation Changes
From July 2026, super balances above $3 million may face an additional tax on earnings attributable to the excess balance, increasing the effective rate to 30% on those earnings. As legislation continues to evolve, professional advice is recommended to assess how this may affect your situation.
Increased ATO Monitoring
The ATO now collects extensive data from:
- Banks
- Crypto exchanges
- Property managers
- Share registries
This makes unreported capital gains easier to detect and accurate record-keeping more important than ever.
Foreign Resident Withholding
When foreign residents sell Australian property, 15% of the sale price is withheld at settlement to cover potential CGT obligations.
Smart Strategies to Reduce Capital Gains Tax Legally
Hold Assets Longer
Holding assets for more than 12 months unlocks the 50% CGT discount. Waiting just a few extra days can save thousands.
Time Your Sale
Selling in a lower-income year can significantly reduce the tax payable on your gain.
Offset Gains With Losses
Capital losses can offset capital gains and be carried forward indefinitely until used.
Use the Right Ownership Structure
Trusts, super funds, and joint ownership structures can reduce CGT when set up correctly.
Keep Excellent Records
Maintain records of:
- Purchase and sale dates
- Costs and improvements
- Ownership periods
- Disposal expenses
Missing records can lead to higher taxable gains.
Common Capital Gains Tax Questions Answered
Do I pay CGT on cryptocurrency?
Yes. Selling, trading, or swapping cryptocurrency triggers a CGT event — even crypto-to-crypto trades. Accurate records are essential.
What if I make a capital loss?
Capital losses can offset capital gains and be carried forward to future years. They cannot offset salary or wages.
Do I pay CGT on inherited property?
No CGT is payable when you inherit an asset. CGT only applies when you later sell it.
Can I avoid CGT by gifting assets?
No. Gifting assets (except to a spouse) triggers CGT based on market value, even if no money is received.
What happens if I rent out my main home?
You may retain the main residence exemption for up to six years while renting it out, provided you don’t claim another main residence.
Need Help Reducing Your Capital Gains Tax?
Capital gains tax rules are complex, and mistakes can be costly. At Infinity22, we help investors, business owners, and property sellers legally minimise CGT while staying fully compliant with ATO requirements.
As part of our professional accounting and tax services, we handle everything from capital gains tax planning and reporting to income tax returns, BAS, superannuation, and ATO compliance — so you don’t have to spend hours dealing with spreadsheets or confusing tax rules.
Whether you’re selling property, shares, cryptocurrency, or a business, our experienced accountants provide clear, tailored advice designed to save you money and give you peace of mind.
👉 Contact Infinity22 today to discover how much capital gains tax you could legally save.
