Capital gains tax on shares applies when you sell, gift or otherwise dispose of shares for more than they cost you. The gain is added to your taxable income and taxed at your marginal rate, and if you held the shares for at least 12 months as an Australian resident individual, only half the gain is taxed.
Dividends are different. They are taxed as ordinary income in the year you receive them, not under capital gains tax. CGT only comes into play when a CGT event happens, which for most investors means selling shares on the market.
The rules are also about to change. From 1 July 2027 the 50% discount is replaced by cost base indexation and a 30% minimum tax for individuals, trusts and partnerships, under a law that is now passed. Here is how the current rules work, what changes and what it means if you already hold shares.
Key takeaways
- You only pay CGT on shares when a CGT event happens, usually a sale. Paper gains and paper losses don’t count.
- Your capital gain is what you received (less brokerage) minus your cost base (purchase price plus brokerage).
- Resident individuals and trusts who held shares for at least 12 months can cut the gain by 50%. Complying super funds get 33.33%. Companies get no discount.
- Capital losses can only be used against capital gains, but unused losses carry forward with no time limit.
- From 1 July 2027 the 50% discount is replaced by CPI indexation of the cost base, with a 30% minimum tax on capital gains for resident individuals. Gains made before that date keep the 50% discount.
| Item | Current position (2026-27) |
|---|---|
| When CGT is triggered | When you sell or otherwise dispose of shares (a CGT event). For a sale contract, the event happens on the contract date, not settlement |
| How the gain is taxed | Added to your taxable income and taxed at your marginal rate, plus the 2% Medicare levy |
| CGT discount | 50% for resident individuals and trusts, 33.33% for complying super funds, nil for companies |
| Minimum holding period for the discount | At least 12 months, excluding the day you bought and the day of the CGT event |
| Capital losses | Offset against capital gains only, carried forward indefinitely if unused |
| Resident tax rates 2026-27 | Nil to $18,200, 15% to $45,000, 30% to $135,000, 37% to $190,000, 45% above |
| From 1 July 2027 | 50% discount replaced by cost base indexation plus a 30% minimum tax for resident individuals |
How is capital gains tax on shares calculated?
The ATO sets out the steps in its guide on how to calculate your CGT. For shares it works like this:
- Work out your capital proceeds. This is the sale price less the brokerage on the sale. If you give shares away or sell them to a relative for less than they are worth, use the market value instead.
- Work out your cost base. This is what you paid for the shares plus brokerage and other incidental costs of buying them.
- Subtract the cost base from the proceeds. A positive result is a capital gain. A negative result (using the reduced cost base) is a capital loss.
- Apply capital losses. Take off current-year losses and any net capital losses carried forward from earlier years. You can choose to apply them to gains that don’t get the discount first.
- Apply the CGT discount to what is left of any gains on shares held for at least 12 months.
- Report the net capital gain in your tax return. It is added to your other income and taxed at your marginal rate.
If you want a quick estimate before you sell, try our capital gains tax calculator.
Who gets the CGT discount on shares?
Under the ATO CGT discount rules, you can reduce a capital gain by 50% if you are an Australian resident individual or trust and you owned the shares for at least 12 months before the CGT event. You exclude the day you acquired the shares and the day of the CGT event when counting the 12 months.
- Individuals and trusts: 50% discount.
- Complying super funds: 33.33% discount.
- Companies: no discount. A company pays tax on the full gain.
- Foreign and temporary residents: no discount on gains after 8 May 2012, although an apportioned discount may apply for periods you were an Australian resident.
Tip
Selling a few days too early can cost you the discount. Check the purchase date on your contract note and count 12 full months, leaving out the purchase day and the sale contract day.
Which share events trigger capital gains tax?
Selling on the ASX is the most common trigger, but it is not the only one. A CGT event can also happen when:
- you give shares to someone (the market value on the day is used as your proceeds)
- a company buys back your shares
- your shares are taken over or merged into another company
- a company demerges part of its business (a rollover may be available)
- you receive certain non-assessable payments from a trust that exceed your cost base
- a liquidator or administrator declares in writing that shareholders will get nothing further, which lets you claim a capital loss
If you reinvest dividends through a dividend reinvestment plan, the dividend is still taxable income and the reinvested amount becomes the cost base of the new shares. Our guide to fully franked dividends explains how dividends and franking credits are taxed.
Can you use capital losses on shares?
Yes, but only once you have sold. The ATO is clear that you cannot claim a paper loss on shares you still hold. For share investors:
- a loss on shares is a capital loss and can only be offset against capital gains
- it cannot be used against wages, business income or other income
- unused capital losses carry forward to future years until you have gains to use them against
Share traders are different. If you are running a share trading business, profits are ordinary income and losses are revenue losses, which can generally be offset against other income subject to the non-commercial loss rules.
Watch out
Selling shares just before 30 June to lock in a loss and then buying the same or very similar shares back soon after is a wash sale. The ATO uses share registry data to find these and can deny the capital loss and apply penalties. See the ATO warning on wash sales.
What records do you need for shares?
Each parcel of shares bought at a different time is a separate CGT asset. The ATO lists the records to keep for shares, including:
- purchase dates, prices and brokerage for every parcel
- sale dates, prices and brokerage
- dividend reinvestment statements
- records of share splits, consolidations, returns of capital, takeovers, demergers and bonus issues
- CHESS or issuer sponsored holding statements
When you sell part of a holding, you can identify which parcel you are selling, as long as your records show it. Picking a higher-cost parcel can reduce the gain.
Under the ATO’s CGT record-keeping rules, keep these records for 5 years after the income year in which you sell. If the sale created a capital loss, keep the records for as long as you carry the loss forward, and for 2 more years after you use it (for individuals not in business).
What changes for capital gains tax on shares from 1 July 2027?
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026. According to the ATO’s capital gains tax reform page, from 1 July 2027:
- The 50% discount is replaced by cost base indexation for resident individuals, trusts and partnerships. Your cost base is increased by inflation (CPI) before the gain is worked out, so only the real gain is taxed. You generally need to have owned the asset for at least 12 months.
- A 30% minimum tax applies to resident individuals on capital gains accruing from 1 July 2027. If the tax on your gain at your normal rates is less than 30% of the gain, you pay a top-up. People who received certain income support payments during the year, such as the age pension, disability support pension or JobSeeker payment, are exempt.
- Gains before 1 July 2027 keep the old rules. Shares you own at that date are treated as sold just before 1 July 2027 and reacquired on that date. The gain up to that point still gets the 50% discount, but it is only taxed when you actually sell.
- Pre-CGT shares (bought before 20 September 1985) stay exempt for gains up to 1 July 2027, but later growth is taxed.
For listed shares, the value just before 1 July 2027 will usually be easy to find from the market price. The law also allows an apportionment method as an alternative, but the method is still to be set by the Minister, and the ATO says it will publish guidance before the start date. The negative gearing changes in the same Act only affect residential property, not shares. Read more in our guide to the negative gearing changes and our summary of capital gains tax changes in Australia.
Worked example: selling shares before and after 1 July 2027
The facts
Priya is an Australian resident with a salary of $80,000. On 1 August 2024 she bought 2,000 shares at $10.00 each, paying $20 brokerage. Her cost base is $20,020. She has no capital losses.
Old rules: she sells on 1 September 2026
Priya sells all 2,000 shares at $16.00 each and pays $20 brokerage.
- Capital proceeds: $32,000 minus $20 = $31,980
- Capital gain: $31,980 minus $20,020 = $11,960
- She held the shares for more than 12 months, so the 50% discount applies: $11,960 × 50% = $5,980
- Her taxable income becomes $85,980, still in the 30% bracket for 2026-27
- Tax on the gain: $5,980 × 30% = $1,794, plus Medicare levy of $5,980 × 2% = $119.60, a total of $1,913.60
If she had sold within 12 months, the whole $11,960 would be taxed: $11,960 × 32% = $3,827.20. Waiting past the 12-month mark saves her $1,913.60.
New rules: she sells on 1 July 2029
Now assume Priya keeps the shares. Just before 1 July 2027 they are worth $17.00 each ($34,000). She sells on 1 July 2029 at $19.00 each, paying $20 brokerage. For illustration we assume inflation of 2.5% a year (the same assumption used in the Government’s Budget explainer); the actual figure will come from CPI.
- Gain before 1 July 2027: $34,000 minus $20,020 = $13,980. The 50% discount still applies: $13,980 × 50% = $6,990
- Indexed cost base from 1 July 2027: $34,000 × 1.025 × 1.025 = $35,721.25
- Capital proceeds: $38,000 minus $20 = $37,980
- Gain after 1 July 2027: $37,980 minus $35,721.25 = $2,258.75 (no discount, the indexation replaces it)
- Net capital gain: $6,990 + $2,258.75 = $9,248.75
- Tax at 30% plus 2% Medicare levy (assuming her income stays in the 30% bracket): $9,248.75 × 32% = $2,959.60
Under the old 50% discount the same sale would have given a taxable gain of $17,960 × 50% = $8,980 and tax of $2,873.60, so the new rules cost Priya $86 more here. The 30% minimum tax does not add anything because her marginal rate is already 30%.
Watch out
The minimum tax mainly hits people with low other income in the year they sell, such as self-funded retirees. In the Government’s Budget explainer, someone with $25,000 of other income who makes a $10,000 gain in 2029-30 would pay $1,400 at the 14% rate, then a $1,600 top-up to reach 30% ($3,000). Timing a sale for a low-income year will no longer reduce the tax rate below 30% on post-2027 gains.
How can you legally reduce capital gains tax on shares?
- Hold for at least 12 months to get the 50% discount on gains made before 1 July 2027.
- Use capital losses from genuinely sold investments against gains, and keep track of losses carried forward.
- Choose the parcel you sell when you hold shares bought at different prices, and keep records that show it.
- Keep every contract note so brokerage is included in your cost base and proceeds.
- Consider who owns the shares for new investments. Different entities get different CGT treatment, so get advice before buying.
- Plan for 1 July 2027. Record the market value of your holdings just before that date, as you will need it when you sell.
If you also hold digital assets, the same CGT rules apply to crypto. See our guide to crypto tax in Australia.
Frequently asked questions
Do I pay capital gains tax on shares if I don’t sell?
No. Capital gains tax only applies when a CGT event happens, such as selling, gifting or a buy-back. A rise in value on shares you still hold is not taxed, and a fall in value cannot be claimed as a loss until you dispose of the shares.
What rate of capital gains tax do I pay on shares in Australia?
There is no separate CGT rate. Your net capital gain is added to your taxable income and taxed at your marginal rate, plus the 2% Medicare levy. For 2026-27 the resident rates are nil up to $18,200, then 15%, 30%, 37% and 45%. If you held the shares for at least 12 months, only half the gain is taxed.
Can I offset share losses against my salary?
No, not as an investor. A capital loss on shares can only be offset against capital gains. Unused capital losses carry forward to later years. Only a genuine share trading business can treat losses as revenue losses against other income.
Is the 50% CGT discount on shares being removed?
Yes, for gains accruing from 1 July 2027. Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, resident individuals, trusts and partnerships will instead index their cost base to inflation, and resident individuals face a 30% minimum tax on capital gains. Gains made up to 1 July 2027 keep the 50% discount.
Do I need to value my shares at 1 July 2027?
You will generally need the market value of shares you own just before 1 July 2027 when you later sell them, because that value is the dividing line between old and new rules. For listed shares the market price on that date is usually easy to find. The ATO says it will release guidance before the start date.
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Talk to a registered tax agent
Selling shares this year, or wondering how the 1 July 2027 changes affect your portfolio? Call Nanak Accountants & Associates on 1300 626 258. Our capital gains tax services team can work out your gain, apply your losses and plan the timing of sales, and our individual tax return accountants can lodge it for you. You can also contact our team or estimate your refund with our tax refund calculator.
This article is general information only and is not personal financial or tax advice. Information checked against ATO, Federal Register of Legislation and Treasury sources on 16 October 2026.
