What is CGT?

Basically, most (but not all) the  shares, property, or other assets you buy are subject to the CGT rules. In most cases, if you buy for one price and sell them for another price, the difference between the amounts is your capital gain or capital loss.

If you receive more for your CGT assets than you paid for them, you'll have made a capital gain and you may need to pay Capital Gains Tax on it.

However, not all assets are subject to CGT – information about which assets are subject to CGT is available on the ATO website.

You can also find other useful information about CGT on the ATO website

How much CGT will I pay?

The amount of CGT you’ll pay depends on factors including how long you’ve owned the asset, what your marginal tax rate is, and whether you’ve also made any capital losses.

Your marginal tax rate is important because your capital gain will be added to your assessable income in your tax return for that financial year.

The length of time you’ve held your asset is relevant because if you’ve held them for over 12 months, certain taxpayers, such as individuals, can usually get a 50% discount on their capital gain.

What is a CGT event?

Selling assets, such as shares or an investment property, or transferring them to someone else, triggers what’s called a ‘CGT event’.

The CGT event marks the point in time at which you make a capital gain or incur a capital loss.

Other CGT events could include when a managed fund in which you own units distributes a capital gain to you.

You can find out more about CGT events on the ATO website.

What happens if I make a capital loss?

You’d make a capital loss on your CGT assets if you sold them for less than you paid for them.

If you make a capital loss, you can only use it to reduce a capital gain (i.e. you cannot apply a capital loss to reduce the tax you pay on other types of assessable income).

If your capital losses are greater than your capital gains, or if you make a capital loss in a financial year in which you don’t make a capital gain, you can generally carry the capital loss forward and deduct it against any capital gains you make in future years.

What happens if I inherit assets?

A CGT event is generally only triggered when you sell inherited assets, but not all inherited assets are subject to CGT.

If the person who passed away bought the assets after CGT was introduced on 20 September 1985, then the person inheriting the assets will need to determine the cost base. Depending on the asset, the cost base could be:

  • The existing cost base of the deceased person who originally bought the assets; or
  • The market value of the assets at the time of death

If, however, the person who passed away acquired the assets before 20 September 1985, then the person inheriting them is said to have acquired the asset at the time of death. In most cases, the cost base will then be the market value of the assets at that time.

For more information on inherited assets and CGT, visit the ATO website.

Things you should know

This page is intended to provide general information only and does not take into account your individual objectives, financial situation or needs. The above information is not tax advice. Taxation laws are complex and subject to change. Commonwealth Bank does not provide tax (financial) advice under the Tax Agent Services Act 2009 (Cth). You should consider seeking independent tax advice from a registered tax agent, accountant or adviser before you make any decisions based on this information.