Capital Gains Tax (CGT) in Australia – What It Is, Rates, Exemptions & Reporting

Capital Gains Tax (CGT) is the tax you pay on profits (“capital gains”) when you sell an asset such as real estate, shares, or business equipment. The gain is the difference between your purchase price and the selling price.

While CGT is part of your income tax, it has its own rules and concessions. It applies to both individuals and businesses in Australia.

What Triggers CGT?

• Selling a rental property
  
• Selling shares or crypto
  
• Selling a business or asset used in business
  
• Gifts or transfers (some cases)
  

CGT does not apply to:

• Sale of your main residence (if eligible)
  
• Depreciating business assets (covered under depreciation rules)
  

How CGT is Calculated

Capital Gain = Sale Price – Purchase Price – Eligible Costs

You can reduce CGT using:

• 50% discount if asset held > 12 months (for individuals/trusts)
  
• Small business CGT concessions (multiple types)
  

CGT Events and Examples

• CGT Event A1: Selling property or shares
  
• CGT Event C2: Cancelled contracts or rights
  
• CGT Event D1: Creating contractual rights
  

Example: You bought shares for $5,000 and sold them for $7,500. Your capital gain is $2,500. If held >12 months, you may only be taxed on $1,250.

CGT Reporting to the ATO

• Declare gains/losses in your income tax return
  
• Use myTax or a registered tax agent
  
• Must keep records for 5 years after disposal
  

CGT and Small Business Owners

If you sell a business or active asset, you may qualify for:

• 15-Year Exemption
  
• 50% Active Asset Reduction
  
• Retirement Exemption (rollover up to $500k)
  
• Rollover Exemption (defer CGT)
  

Ozobooks checks eligibility and applies the correct concessions.

How Ozobooks Helps

• Reviews CGT events and asset history
  
• Calculates accurate gains/losses
  
• Applies discounts and business concessions
  
• Reports to ATO through BAS or tax return support
  

FAQ:

Q1: Do I pay CGT when selling my home?
Usually not, if it’s your primary residence and meets the exemption criteria.

Q2: Is CGT separate from income tax?
No. CGT is included in your income tax return, but has specific rules.

Q3: Do businesses pay CGT?
Yes. Companies and trusts must report and pay CGT on applicable asset sales.

Q4: How do I reduce CGT legally?
Hold assets longer than 12 months, claim exemptions, and seek advice.