The 50% CGT Discount Explained: Australia’s 12-Month Rule in 2026-27
Of all the tax concessions available to everyday Australian investors, the 50% CGT discount is the most valuable — and the most misunderstood. It doesn’t reduce your tax rate. It doesn’t work like a deduction. It literally cuts your capital gain in half before a single dollar of tax is calculated.
On a $200,000 gain, that’s the difference between adding $200,000 to your taxable income and adding $100,000. At the top marginal rate, the discount alone is worth around $45,000. Yet every year, sellers lose it through entirely avoidable mistakes: selling a few days too early, holding through a company, or misunderstanding which date the 12-month clock actually runs from.
This guide covers exactly how the CGT discount works in 2026-27, who qualifies, how the 12 months are counted, and the traps to avoid.
Quick answer: If you’re an Australian resident individual (or a trust) and you’ve held a CGT asset for more than 12 months, you can reduce your capital gain by 50% before adding it to your taxable income. The 12 months run from the contract purchase date to the contract sale date, excluding both dates. Companies get no discount; complying super funds get 33.33%.
What the discount actually does
The mechanics are simpler than most tax law. Take your gross capital gain, subtract any capital losses, then — if you qualify — halve what’s left. That halved amount is your net capital gain, and it goes into your tax return as part of your assessable income for the year.
Gross gain − capital losses = net gain → 50% discount → taxable gain
Note the order matters: you apply capital losses first, then the discount. You can’t discount the gain and then subtract losses from the discounted amount — the ATO requires losses to come off the top. On a $200,000 gain with $40,000 of carried-forward losses, you discount $160,000 (not $200,000), giving a taxable gain of $80,000.
The discount applies per asset, per CGT event. Sell three parcels of shares in the same year and each one is assessed on its own holding period.
Who qualifies — and who doesn’t
This is where the real money is lost, because the answer depends on what kind of taxpayer you are:
| Taxpayer type | CGT discount |
|---|---|
| Individual (Australian resident) | 50% |
| Trust (family/discretionary/unit) | 50% |
| Complying super fund | 33.33% |
| Company | No discount |
| Foreign or temporary resident | Generally none on gains accrued after 8 May 2012 |
The company rule catches out more small business owners than anything else in this guide. If your investment property or share portfolio sits inside a company structure, there is no 50% discount — the full gain is taxed at the company tax rate (25% for base rate entities, 30% otherwise). Sometimes the company rate still wins on the maths, but you need to actually do the maths rather than assume.
For foreign and temporary residents, the rules tightened years ago: the discount is generally unavailable for gains accruing after 8 May 2012, though a partial discount can apply for periods when you were an Australian resident. If your residency changed during the holding period, this needs professional attention.
There’s also a niche bonus worth knowing: investors providing affordable rental housing to eligible tenants may qualify for an additional discount of up to 10%, taking the total discount as high as 60%. The eligibility criteria are strict — don’t assume it applies without checking.
Counting the 12 months (this is where people go wrong)
The rule says “more than 12 months.” In practice:
- Start date: the contract date you acquired the asset (not settlement)
- End date: the contract date you disposed of it (not settlement)
- Exclude both dates from the count
Buy on 15 March 2025 (contract) and sell on 15 March 2026 (contract) and you have not held it for more than 12 months — you’ve held it for exactly 12 months, and exactly isn’t enough. Sell on 16 March and you qualify.
For property bought off the plan, the clock starts at the contract date — which can be years before settlement. That’s good news: by the time you settle, you may already be most of the way to the discount.
Shares and managed funds work the same way, but watch out for corporate actions. A share split or bonus issue generally doesn’t reset the clock. But if you participate in a buy-back, merger or demerger, the CGT rules can treat you as disposing of one asset and acquiring another — potentially restarting the 12 months. Check before accepting that takeover offer.
Worked example: shares vs property
The discount works identically across asset types. What differs is usually the size of the gain and the costs involved.
Shares. Emma bought $60,000 of ETF units in June 2024 and sold them for $95,000 in August 2026 — a 26-month hold.
- Gross gain: $35,000
- No capital losses to apply
- 50% discount: $17,500 taxable gain
- At the 30% marginal rate (income $45,001–$135,000 in 2026-27), her tax on the gain is $17,500 × 30% = $5,250 (plus Medicare levy)
Property. The same maths on a $180,000 property gain held 5 years: discount to $90,000, taxed at her marginal rate. At 30%, that’s $27,000 instead of $54,000. The discount saved her $27,000 — more than most people’s entire annual tax bill on their salary.
This is why holding period is a genuine investment decision, not just a tax footnote. On a large property gain, selling in month 11 instead of month 13 can be a $20,000+ mistake.
Model both scenarios in our free CGT calculator — toggle the holding period and watch what the discount does to the final bill.
The discount and your other concessions
The 50% discount doesn’t operate in isolation. The order of operations for a property sale with multiple concessions:
- Work out the gross gain (sale price minus cost base)
- Apply any exemptions first — e.g. the main residence exemption or partial exemption shrinks the gain before anything else
- Subtract capital losses — current year losses, then carried-forward losses
- Apply the 50% discount — to whatever remains
- Add to assessable income — taxed at your marginal rate plus Medicare levy
Small business owners get an additional layer: the small business CGT concessions (15-year exemption, 50% active asset reduction, retirement exemption, rollover) can apply on top of the general 50% discount in some cases. If you’re selling business premises or business goodwill, the stacking of these concessions can legitimately reduce a large gain to almost nothing. This is specialist territory — but it’s the single highest-value area of CGT planning in Australia.
Five ways people lose the discount
1. Selling on day 364. The most expensive impatience in Australian tax. Check contract dates, exclude both endpoints, and if you’re close, wait.
2. Holding the asset in a company. No discount, ever. If you’re choosing a structure for a new investment, model the CGT outcome before you commit — changing structures later usually triggers CGT itself.
3. Forgetting the discount doesn’t apply to the loss side. Capital losses can’t be “discounted” — they’re subtracted in full before the discount. And you can’t use the discount to create or increase a capital loss.
4. Assuming foreign residency doesn’t matter. If you were a temporary resident for part of the holding period, the discount may be reduced or denied for the post-8 May 2012 portion. The ATO has been active in this area.
5. Not keeping acquisition records. No contract date, no discount. The ATO can and does ask for evidence of when you acquired the asset. For shares, keep your contract notes or broker statements; for property, the purchase contract.
Frequently asked questions
Do I need to hold for 12 months and a day?
Effectively yes — “more than 12 months” means 12 months plus at least one day, measured contract date to contract date excluding both dates.
Does the discount apply to crypto?
Yes, crypto is a CGT asset like any other. Hold for more than 12 months as an individual and the 50% discount applies to the gain.
Can companies get any CGT discount?
No. Companies are specifically excluded from the CGT discount. They may benefit from other concessions (like the small business concessions), but not the 50% discount.
What if I have capital losses — do I still get the discount?
Yes, but losses are applied first. On a $100,000 gain with $30,000 of losses, you discount the remaining $70,000 to $35,000.
Does the discount apply if I inherited the asset?
You generally inherit the deceased’s acquisition date for discount purposes — so an asset they held for years can qualify immediately in your hands. But the main residence rules for inherited dwellings are separate and have their own two-year window.
Is the 50% discount changing?
It has been legislated for decades and applies for 2026-27. Any change would require new legislation — but it’s always worth confirming the current rules before a major sale, as tax law does change.
The bottom line
The 50% CGT discount is the closest thing Australian tax law offers to free money: hold for a year and a day, halve your taxable gain. The rules are mechanical, the traps are well-documented, and the payoff for getting it right is enormous relative to the effort involved.
Before you sell anything significant, run the numbers both ways — with and without the discount — in our free CGT calculator. And if the asset is property, read our complete guide to CGT on property for the exemptions that stack on top.