Capital Gains Tax for Individuals – ATO Guide Made Simple
Capital Gains – What It Is and What You Need to Do
What Is a Capital Gain?
A capital gain is the profit you make when you sell (or otherwise get rid of) an asset for more than you paid for it. We’re talking shares, investment properties, crypto, collectables — if it goes up in value and you sell it, that gain is taxable.
If you sell it for less than what it cost you, that’s a capital loss. Still important, because you might use that loss to reduce future gains. Here's the Gotax lowdown on CGT.
What Is Capital Gains Tax (CGT)?
There’s no special “capital gains tax” in Australia. Instead, your net capital gain is added to your regular income and taxed at your usual marginal tax rate.
The rules for working it all out are mostly in Part 3-1 and Part 3-3 of the Income Tax Assessment Act 1997 (but don’t worry, we’ve decoded it for humans below).
What Types of Assets Are Covered?
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Shares and units in trusts
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Investment properties
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Cryptocurrencies
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Managed funds
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Collectables (like art, coins, jewellery)
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Personal use assets over $10,000 (like a boat or fancy caravan)
What’s Exempt?
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Your main home (with some exceptions)
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Cars and motorbikes
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Depreciating business assets (e.g. tools, laptops)
How Do You Work Out a Capital Gain or Loss?
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Work out your cost base: That’s what you paid, plus buying costs (like legal fees, stamp duty, agent’s commission, and improvement expenses).
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Work out your capital proceeds: That’s what you got when you sold it — or its market value if you gave it away.
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Subtract cost base from capital proceeds: If positive, you made a capital gain. If negative, you’ve got a capital loss.
Looks too hard - we've got you covered at Gotax.
The CGT Discount
If you’re an individual and held the asset for 12 months or more, you may be eligible for a 50% discount on the capital gain before tax.
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Individuals and trusts get the discount
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Companies don’t
Using Capital Losses
You can use a capital loss to reduce a capital gain — but not your regular income.
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If your capital losses are more than your capital gains, you can carry the leftover loss forward to use in future years.
When Do You Pay CGT?
The date of the “CGT event” — usually when you sell, gift, or dispose of the asset — is when the gain or loss is triggered. It must be declared in the tax return for that year.
What Records Do You Need?
Keep these on hand:
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Purchase and sale contracts
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Receipts for stamp duty, legal fees, agent commissions
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Renovation or improvement costs
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Valuations (if applicable)
Hold them for at least five years after selling the asset.
Gotax FAQ – Real Questions, Real Fast
Q: I sold my family home. Do I pay CGT?
A: Usually not. Your main residence is exempt — unless you rented it out or used it for business.
Q: I sold shares I bought two years ago. How’s the gain taxed?
A: Declare the gain, then apply the 50% CGT discount. The result goes into your taxable income.
Q: I made a loss on crypto. Can I use it to reduce my tax?
A: You can only offset capital losses against capital gains — not against salary or business income. Unused losses carry forward.
Q: What if I inherit an asset and then sell it?
A: You’re generally taken to have acquired it at the deceased’s cost base. When you sell, CGT rules apply.
Q: I got shares from work. Is that a capital gain?
A: You might first be taxed under employee share scheme rules. Once you sell them, CGT applies to any gain.
Q: Do I need to declare small gains?
A: Yes. All capital gains and losses must be declared. The ATO gets data from share registries, real estate, and crypto platforms.
Bottom line:
If you sell something for more than it cost you, that’s a capital gain — and the ATO wants to know. Keep records, apply discounts where allowed, and don’t leave anything out. When in doubt, check with a pro… or just ask us below.
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