Capital gains tax
Tax on the profit you make when you sell an asset, added to your income rather than charged at its own rate.
Capital gains tax is not a separate tax with its own rate. Your net capital gain is added to your taxable income for the year and taxed at your marginal rate, which is why a large gain can push you into a higher bracket.
CGT applies to assets acquired after 20 September 1985 — shares, investment property, crypto, collectables, and business assets among them. Your main residence and your personal car are generally exempt.
The gain is the sale price minus your cost base. The cost base includes the purchase price plus buying and selling costs such as stamp duty, legal fees, and brokerage, so keeping those records can save you a great deal of tax later.
A $60,000 gain in one year
Sell an investment property for a $60,000 gain after more than 12 months and you declare $30,000 after the discount. On top of a $90,000 salary, most of that is taxed at 37%.
The bit people get wrong
CGT is triggered by the contract date, not settlement. Signing a contract on 28 June puts the gain in that financial year even if the money does not arrive until August — which can be an expensive surprise.
Common questions
When do I pay capital gains tax?
It is paid as part of your income tax when you lodge the return for the year in which the sale contract was signed. There is no separate CGT bill or payment date.
Do I pay CGT on cryptocurrency?
Yes. Crypto is treated as a CGT asset, and disposing of it — including swapping one coin for another — is a CGT event that must be declared.
Can I avoid CGT by reinvesting the proceeds?
No. Australia has no general rollover for reinvesting sale proceeds. The gain is assessed when you dispose of the asset regardless of what you do with the money.
Run your own numbers
Related terms
Source: Australian Taxation Office