What Is Capital Gains Tax (CGT) and What Does It Apply To?

Understanding CGT in Australia

Capital Gains Tax (CGT) is the tax you pay on the profit made when you sell certain assets. It’s not a separate tax — it’s part of your income tax.

CGT applies to:

• Investment properties
• Shares and managed funds
• Cryptocurrency
• Business assets

For example, if you buy shares for $5,000 and sell them for $5,500, the $500 profit is a capital gain. You’ll pay tax on that gain at your individual income tax rate.

Important notes:

• Your family home is generally exempt from CGT.
• If you make a capital loss, you can offset it against future gains.
• Holding an asset for over 12 months may qualify you for a 50% discount on the gain.

Understanding CGT is crucial for investors and property owners. Speak to your broker or tax adviser to plan ahead and avoid surprises at tax time.