Australian Capital Gains Tax: A Guide & 2026 Changes

Introduced in 1985, the Australian capital gains tax (CGT) is a tax on the profit you make when you sell a taxable asset. Despite its name, capital gains tax in Australia isn’t a standalone tax but rather part of the broader income tax system.

Understanding what the Australian capital gains tax is and how it works is essential for anyone selling property, shares, or other investments. Planning ahead versus selling without a strategy can impact outcomes by tens of thousands of dollars, especially with the upcoming tax changes.

In this article, we’ll explore Australia’s capital gains tax. You’ll learn about triggers, rates, calculations, and timelines, as well as: 

• Which assets are subject to the tax, and which are exempt
• What changes to the capital gains tax are coming into effect in 2027
• How to reduce your liability to CGT in Australia

How Does Capital Gains Tax Work in Australia?

Capital gains tax is calculated by determining the profit on an asset, and then adding that profit to your taxable income for the year. 

To understand how the process works, you need to understand: 

1. What causes a CGT event
2. How the capital gains tax is calculated in Australia
3. What tax rates apply to your capital gains in Australia
4. When you need to pay capital gains tax in Australia

Bonus read: Read our comprehensive guide to discover which countries don’t have capital gains tax and where CGT is conditional.

What Causes a CGT Event?

A capital gains tax event is an event that triggers capital gains tax liability. Typically, it’s a disposal of an asset that results in either a gain or a loss. 

The Australian Taxation Office recognises more than 50 types of events as triggers for capital gains tax. The ones you’ll most likely encounter include:

• Disposing of an asset from your ownership
• Being compensated for a lost, stolen, or destroyed asset 
• Creating a trust over an asset, or entering an asset into a trust
• Getting a capital payment for shares

When a capital gains tax event occurs, you need to report it and any capital gains or losses arising from it in your tax return for that financial year. 

How Is Capital Gains Tax Calculated in Australia? 

Once you know a CGT event occurred, you calculate the capital gains in three steps: 

1. Determine the cost base: Add the money you paid for the asset, any incidental costs of acquiring it, the cost of owning the asset, and capital costs to increase or preserve its value
2. Determine the capital proceeds: This is the amount you receive for disposing of an asset
3. Subtract the cost base from the proceeds: The result can be a positive number, in which case you have capital gains, or a negative number, which means you have capital losses

If you’re an Australian resident and the asset you disposed of has been in your ownership for more than 12 months, you might be eligible for a 50% discount on your capital gains. For any capital gains you accrue in the tax years 2027 and later, you will use cost base indexation to adjust your capital gains, as explained later in the article. 

The number you get is reported on your tax return. You can use the capital losses to offset your capital gains in the current tax year or any future years. You can’t, however, use your capital gains losses to offset any other type of income. 

What Are The Capital Gains Tax Rates in Australia?

The capital gains tax is paid at your marginal income tax rate. For the tax year 2026, the rates are: 

Taxable Income	Tax Due
Up to AUD 18,200	0%
AUD 18,201–AUD 45,000	16% on income over AUD 18,200
AUD 45,001–AUD 135,000	30% on income over AUD 45,000, plus AUD 4,288
AUD 135,001–AUD 190,000	37% on income over AUD 135,000, plus AUD 31,288
AUD 190,001 and over	45% on income over AUD 190,000, plus AUD 51,638

When Do You Pay Capital Gains Tax in Australia?

Capital gains and losses are reported on your tax return for the year in which a capital gains tax event happened and are included as part of your taxable income. You pay any tax owing on your capital gains at the same time you pay your other income tax for the year. 

The lodgement due date for individuals’ income tax is October 31 each year, or the first business day after that date if October 31 falls on the weekend. If you use the services of a registered tax agent to lodge your tax return, they might have a different schedule. 

The due date for the payment is November 21 if you lodged the return between July 1 and October 31, or 21 days after your tax assessment is issued, whichever is later.

Which Assets Are Subject to Capital Gains Tax? 

Capital gains tax applies to the majority of assets you acquire after the date the tax was originally introduced, which is September 20, 1985. These assets include: 

1. Property
2. Financial investments
3. Personal use assets
4. Collectables
5. Crypto assets

Property 

Most types of property are subject to capital gains tax in Australia, including vacant land, commercial property, and residential property. With property, the chargeable event is the signing of the sales contract, not the receipt of payment. 

Your main residence is generally exempt from the capital gains tax if you’re an Australian resident and the residence meets the following criteria: 

• You, your partner, and your dependents have used it as a home for the entire period of ownership
• You haven’t used your main residence to produce income, which includes running a business from it, renting it, or purchasing it to renovate and sell for a profit
• The plot of land where the main residence is located isn’t bigger than two hectares

A former residence used to produce income can be treated as your main residence for up to six years after moving out. If you don’t use it for this purpose, you can treat it as your main residence indefinitely. In both cases, you are not allowed to claim any other property as your main residence. 

It’s also possible to get a partial exemption if you don’t fully meet the criteria. An example would be renting a part of your main residence. 

Financial Investments 

Shares, units, and similar financial investments are subject to CGT when a taxable event occurs. The qualifying event can be a sale of shares, but it can also include events such as company share buybacks.

Dividends from your financial investment vehicles are not subject to capital gains tax in Australia and are exposed to regular income tax instead. If, however, you use the dividend to purchase more shares in the company that issued it, then the newly acquired shares will be liable for capital gains tax in case of a future disposal.

An important distinction to make is that shares and other financial investments are subject to capital gains tax only if you’re an investor. If you’re a trader, any gains you make from selling shares are treated as regular income. 

To determine whether you’re a trader or an investor, you can examine: 

• The nature of your activities and whether their purpose is to make a profit
• The regularity, volume, and repetitiveness of your trading activity
• The amount of capital you invest
• The organisational structure and commercial intent of your activities 

Personal Use Assets

Personal use assets are subject to capital gains tax on disposal if they cost more than AUD 10,000 to acquire. This is a broad category that includes objects you keep for personal use or enjoyment, such as furniture, boats, household items, and others.

It’s important to note that capital losses on personal use assets are ignored, and you can’t use them to offset capital gains on other assets. 

Collectables

Assets such as artwork, jewellery, antiques, coins, postage stamps, and rare books are considered collectables and subject to capital gains tax if they meet the following conditions: 

• You acquired them for more than AUD 500
• You acquired a share in the asset for more than AUD 500 after December 16, 1995
• You acquired a share in the asset when it had a market value of more than AUD 500

Any capital losses you incur on the disposal of a collectable can only be used to offset capital gains on other collectables. 

Crypto Assets

Cryptocurrencies and other crypto assets are subject to capital gains tax in Australia if they’re not deemed to be for personal use. 

To determine whether your crypto asset is a personal use asset, you need to consider ownership duration and the primary purpose of use. For example, cryptocurrency that’s been held for a long time and only used partially to make a purchase is less likely to be considered a personal use asset and more likely to be subject to capital gains tax.

What Are Capital Gains Tax Exemptions in Australia?

In addition to a qualifying main residence, a small number of other assets might also be exempt from capital gains tax liability. These include: 

Asset Category	Explanation
Cars and motorcycles	For the purposes of the law, a car is defined as a motor vehicle that can carry fewer than nine passengers and one tonne of load
Pre-CGT assets	Any asset you acquired before the capital gains tax was originally launched in Australia (September 20, 1985) is exempt from the tax
Depreciating assets	Assets such as business equipment and items in a rental property are exempt from the tax
Granny flat arrangements	Gains from an arrangement that allows a person to occupy a property for life are usually exempt from capital gains tax

Numerous events that could lead to income may also be exempt from capital gains tax. These include winnings or losses from gambling, compensation for work injuries, and certain payouts under a general insurance policy. 

Upcoming Changes to Capital Gains Tax in Australia

The Australian government introduced changes to negative gearing and capital gains tax in the 2026–2027 budget. These changes will come into effect starting on July 1, 2027, and will introduce: 

1. Limits to negative gearing for residential property investments
2. Cost base indexation instead of the 50% discount
3. A new minimum tax rate on capital gains

Limits to Negative Gearing for Residential Property Investments

From July 1, 2027, negative gearing on residential property will be limited to new builds only. If you buy an existing residential property, you will only be able to use rental losses to offset income from residential properties, including capital gains, but not other forms of income, such as your salary.

This new rule will apply to property purchased after the time and date the rule was announced, which was 7:30 AEST on May 12, 2026. Any property purchased before that time will be grandfathered in, with further access to negative gearing. 

Properties bought during the transition period will be eligible for standard negative gearing within that timeframe. If your losses exceed your residential property’s income in a given year, you can carry the excess forward to offset future years.

These changes will apply to individuals, partnerships, companies, and most trusts. However, certain categories of property holders will be excluded: 

• Widely held trusts
• Superannuation funds

Cost Base Indexation Instead of the 50% Discount

The 50% discount will be replaced by cost-based indexation from July 1, 2027. Instead of halving your taxable capital gain, the Consumer Price Index will be used to adjust your cost base for inflation. This method was already in place between 1985 and 1999, when it was replaced by the 50% discount. 

The cost base indexation will apply to:

• All assets subject to capital gains tax
• Assets held for at least 12 months
• Assets owned by individuals, partnerships, and trusts

Transitional rules will allow you to qualify for the discount on any gains made before the tax changes become effective. If you sell an asset after July 1, 2027, the gains made before then will be subject to the discount, while the gains made after will be adjusted using cost base indexation.

A New Minimum Tax Rate on Capital Gains

A minimum tax rate of 30% will apply to real capital gains you accrue after July 1, 2027, as they’re realised. In practice, this means that:

• Your tax rate will remain as is if it was supposed to be 30% or higher in a given tax year
• You will pay the new minimum rate if your tax rate was supposed to be lower than 30%

This change will eliminate the possibility of reducing your tax exposure by deferring the realisation of your capital gains until a low-income year. 

How To Reduce Capital Gains Tax in Australia

The changes to Australian tax rules limit tax minimisation via the timing of asset sales, which was one of the more effective ways to lower the tax bill. 

However, even under the new rules, you should ensure that you qualify for the available exemptions, for example, by holding an asset for at least a year before disposing of it. You can also use the sale of underperforming assets to offset any capital gains you might have, and rely on small business concessions if applicable.

For some high-net-worth individuals, losing Australian tax residency may be a strategic tax-optimisation decision. While Australia is one of the countries that has an “exit tax”, requiring deemed disposal of assets on leaving tax residency, doing so sooner rather than later might help avoid high tax costs in the future. Making any such decisions should involve advice from professionals with expertise in tax planning and global mobility. 

This is particularly important for high-net-worth individuals with complicated assets, as tax law can be complex, and your choice of destination can affect both your tax position and residence options.

Qualified professionals can help you identify a destination with favourable tax treatment and navigate the process of obtaining residence abroad. For expert assistance, contact Nomad Capitalist.

Minimise Your CGT Liability With Nomad Capitalist

Nomad Capitalist is a consultancy that specialises in international mobility and asset protection. More than 1,500 clients have relied on our services to legally reduce their tax exposure, obtain a second residency or citizenship, or explore investment opportunities abroad. 

Our core service is the Action Plan, a step-by-step guide to reaching your financial or lifestyle goals. We create the Plan around your specific circumstances and desires, delivering a realistic strategy and blueprint tailored to your goals and timelines. 

Partnering with Nomad Capitalist on an Action Plan is easy: 

1. We ask you to fill out a quick form to determine whether we’re a good match
2. We schedule an onboarding call to learn more about your situation and needs
3. Our experts develop an Action Plan and present it to you for approval
4. We implement the Plan and manage the administrative parts over 12 months
5. You continue receiving lifelong support from us after the Plan is implemented 

When exploring second-residency options, Nomad Capitalist can advise you on the jurisdictions with the most favourable tax treatment for foreign residents. We can also help you identify the countries with the most accessible residency programs and provide support throughout the residence acquisition process. To find out more, contact Nomad Capitalist today!