Capital Gains Tax in Australia: Your Essential 2025–26 Guide
The end of the 2025–26 financial year is just weeks away. Capital Gains Tax (CGT) is on the minds of millions of Australians. This includes property investors claiming rental deductions, share traders, crypto holders, and small business owners (see our instant asset write-off guide). CGT is one of the most complex areas of Australian tax law. With the ATO ramping up its data-matching, getting it right has never been more important.
This guide covers the essentials. You’ll learn how CGT works, the key concessions available, what the ATO is watching, and the steps you can take before 30 June 2026.
What Is Capital Gains Tax?
CGT is not a separate tax. It is part of your income tax. When you make a capital gain from selling an asset, that gain is added to your income and taxed at your marginal rate.
When Does a CGT Event Happen?
A CGT event is triggered when you:
- Sell or gift an asset
- Trade or swap one asset for another
- Have an asset lost or destroyed
- Stop being an Australian tax resident
What Assets Are Covered?
Common CGT assets include investment properties, shares, units in managed funds, and crypto. Some assets are exempt. These include your car, personal items bought for $10,000 or less, and assets bought before 20 September 1985 (pre-CGT assets).
How Is the Gain or Loss Calculated?
A capital gain happens when your sale price is more than the asset’s cost base. The cost base includes the purchase price plus costs like stamp duty, legal fees, and brokerage. A capital loss happens when the sale price is less than the reduced cost base. You can’t use capital losses to offset regular income. But you can carry them forward to reduce future capital gains.
The 50% CGT Discount: Your Most Powerful Tool
If you hold an asset for at least 12 months before selling it, you may get the CGT discount. This is one of the most valuable concessions in Australian tax.
- Individuals and trusts: 50% discount on the net capital gain
- Complying super funds: 33.33% discount
- Companies: Not eligible
The 12-month period is counted precisely. It excludes both the day you bought and the day you sold the asset. In practice, you need to hold it for at least 367 days (or 368 in a leap year).
Important: The discount is applied after offsetting any capital losses. If you’re about to sell an asset held for just under 12 months, consider waiting a little longer. It could halve your tax bill.
The Main Residence Exemption
If you sell the home you live in, you may pay no CGT at all. To qualify, you must meet these conditions:
- The property was your main home for the entire time you owned it
- You didn’t use it to earn income (e.g., rent it out or run a business from it)
- The land is two hectares or less
- You were an Australian tax resident when you sold it
The 6-Year Rule
What if you move out and rent your home? You can still treat it as your main home for up to six years per absence. Any capital gain during that time may be fully exempt. However, you can’t treat any other property as your main home during this period.
Partial Exemptions
Did you rent out part of your home or use it for business? If so, CGT applies to that portion of the gain. Similarly, if the property was only your main home for part of the time you owned it, you only get a partial exemption.
Note for foreign residents: Since 1 July 2020, foreign residents generally can’t claim the main residence exemption. An exception applies if you meet a specific life events test.
Small Business CGT Concessions
Do you run a small business and sell an active business asset? You may qualify for up to four powerful CGT concessions. Together, they could reduce your gain to zero.
Who Is Eligible?
To access these concessions, you must:
- Be a small business entity with total turnover under $2 million, OR pass the $6 million maximum net asset value test
- The asset sold must pass the active asset test — it was used or held ready for use in your business
The Four Concessions
- 15-Year Exemption — Full exemption if you’ve owned the asset for 15+ years and you’re aged 55 or over and retiring (or permanently incapacitated)
- 50% Active Asset Reduction — Cuts the capital gain by 50%. You can stack this with the general CGT discount.
- Retirement Exemption — Exempts gains up to a lifetime limit of $500,000. If you’re under 55, the amount must go into super.
- Rollover — Defers the gain by rolling it into a replacement active asset
You can apply these concessions one after another. This can potentially wipe out CGT entirely on the sale of a business asset.
CGT on Shares and Cryptocurrency
Shares
CGT applies when you sell shares. Your capital gain is the sale price minus the cost base (purchase price plus brokerage). The 50% discount applies if you held the shares for 12+ months.
Cryptocurrency
The ATO treats crypto as a CGT asset — not currency. This means every disposal is a CGT event. This includes:
- Selling crypto for Australian dollars
- Swapping one crypto for another (e.g., Bitcoin for Ethereum)
- Using crypto to pay for goods or services
- Gifting crypto
Simply buying and holding crypto is not a CGT event. Transferring between your own wallets is also not a CGT event. However, staking rewards, mining income, and some airdrops are usually treated as ordinary income when you receive them — not capital gains.
The ATO gets data from Australian and international crypto exchanges. It matches this data against tax returns and reporting duties. If you’ve traded crypto and haven’t reported it, the ATO likely already knows.
Record-Keeping: Non-Negotiable
You must keep records for at least five years after the CGT event. If you carry forward a capital loss, keep records until five years after the loss is fully used.
Key records to keep include:
- Purchase and sale contracts, dates, and prices
- Receipts for all related costs (stamp duty, legal fees, brokerage, advertising)
- Records of capital improvements
- Any market valuations you obtained
- For crypto: the date, AUD value, purpose, and counterparty for every transaction
Poor record-keeping is one of the ATO’s top concerns. It’s a fast track to an audit.
What the ATO Is Watching in 2025–26
The ATO uses advanced data-matching to find CGT errors. Key focus areas include:
- Property transactions — especially “flipping” and wrong use of the main residence exemption
- Cryptocurrency — exchange data is matched against tax returns
- Small business CGT concessions — the ATO checks whether all eligibility conditions are truly met
- Trust arrangements — especially where trusts may wrongly apply CGT exemptions for foreign beneficiaries
- Restructures before asset sales — arrangements designed to access concessions just before a sale are under close watch
Key Strategies Before 30 June 2026
- Wait for the 12-month mark before selling assets to access the 50% CGT discount
- Harvest capital losses — check your portfolio for assets with unrealised losses that could offset gains
- Consider your holding structure — assets held in trusts or SMSFs may attract different CGT treatment
- Use the main residence exemption correctly — understand the 6-year rule if you’ve moved out of a property
- Keep detailed records — especially for crypto and shares
- Get professional advice — CGT law is complex. The cost of getting it wrong far outweighs the cost of good advice.
Sources
- ATO — Guide to capital gains tax 2025
- ATO — CGT discount
- ATO — Main residence exemption
- ATO — Small business CGT concessions
- ATO — How to work out and report CGT on crypto
- ATO — Capital gains tax asset records
- ATO — What attracts our attention: Privately owned and wealthy groups
Ready to Manage Your CGT Before 30 June?
CGT planning is time-sensitive. The ATO is actively checking property, crypto, and business asset sales. The stakes are high. The team at TaxServe Australia helps individuals, investors, and small business owners handle CGT with confidence. We make sure every eligible concession is claimed and every record is in order.
Need help working out your CGT liability? Want to access small business concessions or lodge your 2025–26 tax return? We’re here to help.
Contact TaxServe Australia today for expert, personalised tax advice. Don’t pay a cent more in CGT than you need to.