What Are CGT Events?

Capital gains tax (CGT) in Australia is event-based. Rather than taxing capital gains annually like income, CGT applies only when a specific "CGT event" happens. The ATO categorises these events into groups labelled A through K.

Most people encounter CGT when they sell an investment property, shares, or a business. But CGT events also cover less obvious situations, such as creating contractual rights, receiving compensation, or changes in trust arrangements.

When a CGT event occurs, you calculate the capital gain as the difference between the capital proceeds (what you receive) and the cost base (what you paid, plus associated costs). If the result is negative, you have a capital loss.

Common CGT Events at a Glance

The table below summarises the most frequently encountered CGT events. Knowing which event applies is the first step in calculating your capital gains tax correctly.

CGT Event A1: Disposal of an Asset

CGT event A1 is by far the most common. It happens when you sell, gift, exchange, or otherwise dispose of a CGT asset. The time of the event is the date you enter into the contract, not the settlement date.

For shares, this means the CGT event occurs on the trade date, not the settlement date (T+2). For property, it is the date of exchange, not settlement. This distinction matters because it determines which financial year's tax return the gain appears in.

To calculate the capital gain for A1 events, subtract the asset's cost base from the capital proceeds. The cost base includes the purchase price, stamp duty, legal fees, and any capital improvements. You can also include borrowing costs and holding costs in some cases.

The 50% CGT Discount in FY 2025-26

Australian resident individuals are entitled to a 50% discount on capital gains if the asset was held for at least 12 months before the CGT event. This means only half of the capital gain is included in your assessable income and taxed at your marginal rate.

The discount does not apply to companies. Super funds receive a 33.33% discount after 12 months. The discount also does not apply to capital gains from assets acquired and sold within 12 months.

The table below shows how much tax you would pay on a $100,000 capital gain from shares held for over 12 months, at various income levels.

Main Residence Exemption

One of the most valuable CGT exemptions is the main residence exemption. When you sell your primary home, any capital gain is generally exempt from CGT. This applies under CGT event A1 when you dispose of the property.

There are important limits. If you use your home for business purposes or rent it out, the exemption may be partially reduced. The six-year absence rule allows you to treat a property as your main residence for up to six years while it is rented out, as long as you do not claim another property as your main residence.

Properties acquired before 20 September 1985 are generally exempt from CGT, as CGT only applies to assets acquired after that date. This is known as the pre-CGT exemption.

Capital Losses and Carry Forward

If your capital losses exceed your capital gains in a financial year, you have a net capital loss. This loss cannot reduce your salary or business income, but it can be carried forward indefinitely to offset future capital gains.

You must apply capital losses before the 50% CGT discount. This means if you have $20,000 in carried-forward losses and a $100,000 gain on a 12-month-old asset, the loss first reduces the gain to $80,000, then the 50% discount applies to bring it to $40,000.

Keep records of all capital losses, even if you do not use them immediately. The ATO requires verification if you claim carried-forward losses, and you should include them in your tax return each year even if you have no gains to offset.

CGT and Property Investment

Investment properties are one of the most common sources of capital gains. When you sell a rental property, you calculate the gain based on the sale price minus the cost base, which includes the original purchase price, stamp duty, legal fees, and capital improvements.

Depreciation claimed during ownership reduces your cost base, potentially increasing the capital gain. This is called the "cost base reduction" for depreciation. Use our income tax calculator to see how a capital gain affects your overall tax position.

If you lived in the property before renting it out, the gain may be apportioned between the exempt period (when it was your home) and the taxable period (when it was rented). The take-home pay calculator can help you understand the cash flow implications of holding an investment property.

Frequently Asked Questions

How do I report a CGT event in my tax return?

Capital gains are reported in your annual tax return using the Capital Gains Tax Schedule. You list each CGT event, the date, the capital proceeds, the cost base, and the resulting gain or loss. Most tax agents use ATO-approved software that handles the calculations automatically.

What is the difference between CGT event A1 and C2?

A1 applies when ownership of an asset changes, such as selling shares or property. C2 applies when an asset ceases to exist, such as when a right expires, shares are cancelled, or a trust ends. Both can trigger a capital gain, but the calculation method differs slightly.

Can I offset CGT with other tax deductions?

Yes. Capital gains are added to your assessable income, so any general deductions you are entitled to — such as investment loan interest, management fees, or capital losses — can reduce the overall tax payable. However, capital losses can only offset capital gains, not other income.

Do I pay CGT on cryptocurrency?

Yes. Cryptocurrency is a CGT asset. Each time you sell, trade, or dispose of crypto (including swapping one coin for another), a CGT event occurs. If you hold the crypto for more than 12 months, the 50% CGT discount applies. Use our Medicare levy calculator to factor in the 2% levy on your total taxable income including capital gains.

Does the main residence exemption cover land?

If you buy land with the intention of building your home and move in as soon as possible after construction, the exemption can apply. However, vacant land held without a dwelling for an extended period may not qualify. The ATO considers the purpose and timing of your occupancy.