If you sold ASX shares this financial year for more than you paid, you owe capital gains tax on the profit. In 2026-27 the core rule is unchanged: hold the shares for more than 12 months and only half the gain is added to your taxable income, thanks to the 50% CGT discount. Sell earlier and the full gain counts. But there’s a big change coming — from 1 July 2027 the discount is being replaced by cost base indexation plus a 30% minimum tax on net capital gains, so the 2026-27 year may be your last under the old rules.
How capital gains tax on shares actually works
CGT isn’t a separate tax. Your net capital gain gets added to your assessable income and taxed at your marginal rate — the same rate that applies to your salary. The formula is simple:
Capital gain = Capital proceeds − Cost base
Capital proceeds are what you received for the shares (minus selling costs like brokerage). Cost base is what it cost you to get and keep them. The CGT event happens on the contract date — the day you hit “sell” — not the settlement date two days later. That matters if you sell on 29 June: the gain belongs in this year’s return.
What goes into your cost base
According to the ATO’s guide to CGT on the sale of shares, the cost base elements for shares are:
| Cost base element | Example |
|---|---|
| What you paid for the shares | Purchase price × number of shares |
| Incidental costs of buying | Brokerage, legal fees, investment adviser’s fees |
| Incidental costs of selling | Brokerage on the sale |
| Costs of preserving/defending your title | Rare for ordinary share sales |
One trap: a capital return from the company reduces your cost base instead of being taxed immediately. If you ignore it, you’ll overpay CGT when you eventually sell.
The 2026-27 tax rates that apply to your gain
Your net capital gain is taxed at your marginal rate. For Australian residents in 2026-27:
| Taxable income | Marginal rate | Effective CGT rate after 50% discount |
|---|---|---|
| $0 – $18,200 | 0% | 0% |
| $18,201 – $45,000 | 15% | 7.5% |
| $45,001 – $135,000 | 30% | 15% |
| $135,001 – $190,000 | 37% | 18.5% |
| $190,001 and over | 45% | 22.5% |
Note the second bracket fell from 16% to 15% on 1 July 2026. Add the 2% Medicare levy on top in most cases — our CGT calculator handles this automatically. For the full bracket breakdown, see our 2026-27 income tax rates guide.
Who gets the 50% discount
| Investor | Held 12+ months | Held under 12 months |
|---|---|---|
| Individual (Australian resident) | 50% discount | No discount |
| Trust | 50% discount | No discount |
| Complying super fund | 33⅓% discount | No discount |
| Company | No discount | No discount |
It’s more than 12 months: buy on 4 August 2025 and you must sell on 5 August 2026 or later. Selling on 4 August exactly does not qualify. Read our deep dive on the 50% CGT discount and the 12-month rule for the finer points.
Which shares did you actually sell? Parcel selection explained
Here’s the part most guides skip. If you bought shares in the same company at different times, you own several parcels — and because shares are interchangeable, the ATO lets you choose which parcel you sold. The three common methods:
- FIFO (first-in, first-out) — you sold your oldest parcel first.
- LIFO (last-in, first-out) — you sold your newest parcel first.
- HIFO/HCFO (highest-in, first-out) — you sold your most expensive parcel first, usually minimising the gain.
You can use a different method each time you sell, as long as your choice is clear and consistent for that sale. Most investors default to FIFO because it’s simplest, but if you bought a parcel at the top of the market, HIFO can legitimately shrink your tax bill. Your broker’s records usually default to FIFO — check before you rely on them.
Step-by-step: calculating CGT on a share sale
- Identify the parcel you sold (FIFO, LIFO or HIFO) and its acquisition date.
- Work out the cost base: purchase price + brokerage and other costs for that parcel. Subtract any capital returns.
- Work out the capital proceeds: sale price − selling brokerage.
- Subtract: proceeds − cost base = your capital gain (or loss).
- Apply capital losses first: subtract any current-year or carried-forward capital losses from the gross gain. Losses can’t offset salary — only gains.
- Apply the 50% discount if you held the parcel for more than 12 months.
- Add the net gain to your assessable income and pay tax at your marginal rate.
Worked example: Emma sells 200 of her 400 shares
Emma is a Brisbane marketing manager earning a $95,000 salary in 2026-27.
- 4 August 2025: buys 400 shares at $118 each = $47,200, plus $19.95 brokerage. Total cost base: $47,219.95.
- 18 November 2026: sells 200 shares at $142 each = $28,400, minus $19.95 brokerage. Net proceeds: $28,380.05.
She owns one parcel, so the cost base of the 200 shares sold is half the total: $47,219.95 ÷ 2 = $23,609.98.
- Capital gain: $28,380.05 − $23,609.98 = $4,770.07
- Held 15 months → 50% discount applies: $2,385.04 net capital gain
- This $2,385.04 is added to her $95,000 salary → taxable income of $97,385.04
The extra $2,385 sits entirely inside her 30% marginal bracket, so the tax on the gain is about $715.50 (plus roughly $47.70 in Medicare levy). She keeps the remaining 200 shares with a cost base of $23,609.97 — no tax until she sells those.
With a carried-forward loss: suppose Emma also had a $1,500 capital loss from a dud lithium stock she sold in 2025-26. The loss is applied before the discount: $4,770.07 − $1,500 = $3,270.07, then halved to $1,635.04 added to income. The order matters — losses offset the full gain first, which is twice as valuable as offsetting a discounted gain.
Common mistakes share investors make
- Forgetting brokerage in the cost base. Brokerage on both the buy and sell sides counts. Across dozens of trades it adds up — leaving it out inflates your gain.
- Using the settlement date for the 12-month rule. The ATO measures contract date to contract date. Selling “exactly a year later” can accidentally disqualify you from the discount.
- Assuming pre-filled myTax data is complete. The ATO receives trade data from brokers and CHESS, but pre-fill shows proceeds — not your cost base. The ATO explicitly says: don’t rely on it; check your own records.
- Ignoring DRP parcels. Every dividend reinvestment creates a new parcel with its own cost base and its own 12-month clock. Five years of DRP means dozens of parcels to track.
- Expecting losses to reduce salary tax. A $16,000 capital loss can’t touch your wages. It only offsets capital gains, then carries forward indefinitely.
- Rebuying straight after selling at a loss. There’s no fixed safe waiting period in Australia, but the ATO can cancel the tax benefit under Part IVA if you sell at a loss and immediately rebuy to preserve your exposure. A genuine disposal matters.
Tips to pay less CGT (legally)
- Check the calendar before you sell. If you’re at month 11, waiting a few weeks can halve the taxable gain. The 50% discount is the biggest concession most investors will ever get.
- Crystallise losses before 30 June. A genuine disposal of a losing position before year-end offsets this year’s gains dollar-for-dollar.
- Time sales to low-income years. A gain added to a $50,000 year is taxed at 15–30%; in a $200,000 year it’s 45%. Retirement, parental leave or a sabbatical year are worth planning around — and pairing a sale year with salary sacrifice contributions can pull your marginal rate down before the gain lands.
- Keep records for at least 5 years after disposal (longer if you’re carrying forward a loss). The ATO can download trade data to you via myGov → ATO → Shares and unit records — but your brokerage receipts are the proof.
- Get your TFN on file with your broker. Without it, dividends cop 47% withholding tax — and mismatched personal details can scramble the ATO’s pre-fill matching.
- Plan for 1 July 2027 now. Under the legislated reform, the 50% discount is replaced by cost base indexation plus a 30% minimum tax on net capital gains for individuals. Gains accrued before 1 July 2027 keep the old rules, so if you hold long-term parcels with big unrealised gains, a valuation before that date could be one of your most valuable records. The ATO is still publishing detailed guidance — we’ll update this article as it lands.
CGT on shares — frequently asked questions
Do I pay CGT if I just transfer shares between brokers?
No. Moving shares from one broker to another doesn’t change beneficial ownership, so there’s no CGT event. Your original purchase dates and cost base carry over — just watch for exit fees from the old broker.
How does the CGT discount work with a dividend reinvestment plan?
Each DRP allocation is a separate parcel: its cost base is the share price on the reinvestment date, and its own 12-month clock starts then. When you sell, you need to identify which DRP parcels you disposed of. This is the single biggest record-keeping headache for long-term ASX investors.
Are ETFs taxed differently from ordinary shares?
The sale rules are identical — ETF units are shares for CGT purposes. The extra wrinkle is that the fund itself buys and sells holdings, so you can be attributed capital gains on your annual AMMA statement even in a year you sold nothing. AMIT cost base adjustments (increase or decrease amounts on that statement) must be applied to your units’ cost base, or you’ll be taxed twice on the same gain.
Can a capital loss on shares reduce my salary tax?
No. Capital losses can only offset capital gains — current-year or future (they carry forward indefinitely). They can’t reduce wages, business income or other ordinary income, and they can’t be converted into revenue losses later.
What happens if I gift shares to my children?
Gifting is a CGT event. You’re treated as having sold the shares at their market value on the day you gave them away, and any gain or loss goes in your return for that year. The recipient’s cost base is that same market value.
What about a takeover, merger or share buy-back?
These all trigger CGT events, but special rules can defer the tax. A scrip-for-scrip rollover lets you disregard the gain when you receive replacement shares in a takeover or merger (same type of interest), shifting the cost base to the new shares. Off-market buy-backs can split proceeds between a dividend component and a capital component — check the company’s buy-back booklet. If a company goes into liquidation, a written declaration that shares are worthless lets you claim the capital loss.
The bottom line
CGT on shares boils down to three numbers: what it cost you (including brokerage), what you got for it (minus brokerage), and how long you held it. The same formula drives capital gains tax on property, though the cost base there is far messier. Get the cost base right, apply losses before the discount, and count the 12 months from contract date — and most investors will land the correct result. With the July 2027 overhaul on the horizon, the 2026-27 financial year is also the moment to review long-held parcels, tidy your records and talk to a registered tax agent before the rules change.
General information only — not personal tax advice. The 2027 reform detail reflects legislation as enacted; the ATO is still publishing operational guidance.