Published: 1 April 2026

CGT on Shares Sold Australia: Your Complete Guide for FY 2025-26

Selling shares can be an exciting moment for any investor, but it also brings important tax obligations that many Australians overlook. Whether you have just sold your first parcel of shares or you are an experienced trader managing a diversified portfolio, understanding how Capital Gains Tax (CGT) applies to your share sales is essential for staying compliant with the Australian Taxation Office (ATO) and avoiding unexpected tax bills.

This comprehensive guide explains everything you need to know about CGT on shares sold in Australia for the 2025-26 financial year. We will cover how to calculate your capital gains, the valuable 50% discount available to long-term investors, record-keeping requirements, and strategies to legally minimise your tax liability. By the end, you will have a clear understanding of your obligations and how to make informed decisions about when and what to sell.

What Is Capital Gains Tax on Shares?

Capital Gains Tax is the tax you pay on the profit made from selling shares or other investments. In Australia, CGT is not a separate tax but rather forms part of your regular income tax. When you sell shares for more than you paid for them, the profit (known as a capital gain) is added to your other taxable income for the financial year and taxed at your marginal rate.

The basic calculation works like this: subtract your cost base from your sale proceeds to determine your capital gain. Your cost base includes not just the purchase price of the shares but also associated costs such as brokerage fees, stamp duty on the original purchase, and any other expenses directly related to acquiring the shares. For example, if you bought 1,000 shares at $20 each and paid $30 in brokerage, your cost base would be $20,030. If you later sold those shares for $35,000 with another $30 brokerage fee, your capital gain would be $14,940.

It is important to note that CGT only applies when you actually dispose of your shares. Simply holding shares that have increased in value does not trigger a tax liability. The CGT event occurs at the moment of sale, which is why timing your share sales strategically can have a significant impact on your overall tax position. Understanding this timing aspect is crucial for effective tax planning, especially if you are looking at your income tax obligations for the year.

CGT Rates on Shares for FY 2025-26

Since capital gains are added to your assessable income, the rate of tax you pay depends on your total taxable income for the financial year. The 2025-26 financial year operates under the Stage 3 tax cuts, which have reshaped Australia's income tax brackets. Understanding these rates helps you estimate the tax impact of your share sales.

The 50% CGT discount is one of the most significant benefits available to Australian share investors. If you hold shares for more than 12 months before selling them, you can reduce your capital gain by 50% before adding it to your taxable income. This discount effectively halves the tax you pay on long-term investments, making it a powerful incentive for patient, long-term investing rather than frequent trading.

Consider this example: Michael purchased shares for $10,000 two years ago and sold them this financial year for $25,000. His gross capital gain is $15,000. Because he held the shares for more than 12 months, he qualifies for the 50% discount, reducing his taxable gain to $7,500. If Michael is in the 30% tax bracket, he will pay $2,250 in tax on this gain rather than $4,500. This substantial saving demonstrates why timing matters when selling shares.

How to Calculate CGT on Shares You Have Sold

Calculating CGT on shares requires attention to detail, particularly when you have acquired the same shares at different times and prices. The ATO allows you to choose between two methods for identifying which shares you have sold: first-in-first-out (FIFO) and specific identification.

Under the FIFO method, you are deemed to have sold your oldest shares first. This is the default method and is often simpler to apply, especially if you have not kept detailed records of your intentions at the time of sale. The specific identification method allows you to choose exactly which parcel of shares you are selling, which can be advantageous for tax planning. For example, you might choose to sell shares with a higher cost base to minimise your current year capital gain, or sell shares held longer than 12 months to qualify for the discount.

Your cost base includes the original purchase price plus any brokerage fees paid on both the purchase and sale. If you have received any non-assessable returns of capital from the company, these amounts reduce your cost base. Dividends, however, do not affect your cost base for CGT purposes, as they are taxed separately as income when received.

Capital losses occur when you sell shares for less than your cost base. These losses cannot be used to reduce your salary or other ordinary income, but they can be used to offset capital gains in the same financial year. If your capital losses exceed your capital gains, the excess can be carried forward indefinitely to offset future capital gains. This makes capital losses a valuable tool for managing your tax position over time.

CGT Exemptions and Special Rules for Shares

While most share sales attract CGT, there are some important exemptions and special rules that Australian investors should understand. The most significant exemption applies to shares acquired before 20 September 1985, which are completely exempt from CGT regardless of when they are sold. If you have inherited such shares, their cost base is generally the market value at the date of death of the original owner.

Employee share schemes (ESS) have their own CGT rules. When you receive shares or rights under an ESS, different tax treatments may apply depending on the scheme rules and when you acquired them. Generally, if you pay market value for ESS interests and there are no restrictions on disposal, no upfront tax is payable. However, discounted ESS interests may trigger tax when certain conditions are met, and the CGT clock starts from that point.

Shares held within your superannuation fund are subject to different tax rules. In the accumulation phase, investment earnings within super are taxed at 15%, and capital gains on assets held longer than 12 months receive a one-third discount (effective 10% tax rate). In the pension phase, investment earnings including capital gains are generally tax-free. This makes superannuation a highly tax-effective vehicle for long-term share investing.

Companies do not receive the 50% CGT discount. If you hold shares through a company structure, capital gains are taxed at the flat company tax rate of 25% on the full gain. This is an important consideration when deciding on the most tax-effective investment structure for your circumstances.

Reporting Share Sales and CGT in Your Tax Return

All capital gains and losses from share sales must be reported in your annual tax return, even if the 50% discount brings your net capital gain to zero. You will need to complete the Capital Gains section of your tax return, providing details of each CGT event including the dates of acquisition and disposal, proceeds, cost base, and any discount applied.

Good record-keeping is essential for CGT compliance. You should maintain records of all share transactions for at least five years after the relevant tax return is lodged. This includes contract notes, brokerage statements, dividend reinvestment plan statements, and documentation of any corporate actions such as share splits or consolidations. Many online brokers provide comprehensive tax reports, but it is wise to maintain your own records as well.

If you have a large volume of share trades, consider using specialised share portfolio software or consulting a tax professional. The ATO receives data from brokers and share registries, so any discrepancies between your return and their records may trigger a review. Accurate reporting protects you from penalties and ensures you claim all legitimate deductions and discounts.

How Share Gains Interact with Your Overall Tax Position

Capital gains from shares do not exist in isolation. They are combined with your salary, investment income, and other earnings to determine your total taxable income. This means that a substantial share gain can push you into a higher tax bracket, affecting not just your CGT rate but your entire financial picture for the year.

If you have a HECS-HELP debt, capital gains are included in your repayment income calculation. For FY 2025-26, the minimum repayment threshold is $67,000, with rates ranging from 1% to 10% of your total income. A significant share sale could unexpectedly increase your HECS repayment obligation, so it is important to factor this into your planning.

Similarly, the Medicare levy of 2% applies to your total taxable income including capital gains. High-income earners may also be liable for the Medicare Levy Surcharge if they do not have appropriate private health insurance. Understanding your take-home pay and overall tax obligations helps you manage cash flow for any tax payments due on share gains.

Strategic planning can help minimise your overall tax burden. Consider the timing of share sales across financial years, especially if you expect significant changes in your income. Making salary sacrifice contributions to superannuation can reduce your taxable income and potentially lower the marginal rate applied to your capital gains. While salary sacrifice does not reduce HECS repayment income, it can still provide substantial tax savings for many investors.

Summary: Key Points for CGT on Shares Sold

Understanding CGT on shares sold in Australia is essential for every share market investor. For the 2025-26 financial year, remember these key principles: CGT applies when you sell shares for a profit, the gain is added to your other income and taxed at your marginal rate, and the 50% discount for shares held longer than 12 months can significantly reduce your tax liability.

Accurate record-keeping is your best defence against ATO scrutiny. Track every share purchase and sale, including dates, prices, and brokerage fees. Choose your cost base calculation method carefully, and consider the tax implications before making large sales. If your share trading is complex or you are unsure about your obligations, consulting a registered tax agent is highly recommended.

Tax planning can help you retain more of your investment returns. Hold shares for at least 12 months when possible, consider timing sales across financial years, and explore how your overall tax position including superannuation contributions can affect your CGT liability. With careful planning and good record-keeping, you can navigate the CGT system confidently and keep more of your hard-earned investment gains.