Capital gains
CGT discount
The CGT discount reduces a capital gain by 50% for individuals and trusts, or one-third for complying super funds, when the asset has been held for at least 12 months.
The CGT discount is a concession that lets eligible taxpayers reduce a capital gain before it is added to their assessable income. If you are an individual or a trust and you held the asset for at least 12 months before the CGT event, you may reduce the gain by 50%. Complying super funds may reduce the gain by one-third. Companies cannot use the discount at all.
The discount applies after capital losses. You first reduce your total gains by any capital losses for the year and any unapplied net capital losses carried forward. If a gain remains and you are eligible for the discount, you then apply it to the remaining amount. This ordering is important because using the discount first and the losses second would produce a different, incorrect result.
The 12 month holding period is counted from the date of acquisition to the date of the CGT event. If you sell an asset at 11 months and 28 days, you generally do not qualify. Since the event date for a contract sale is the contract date, signing a few days earlier or later can make the difference, and that makes careful timing worthwhile.
The discount is not automatic for every asset. Assets that are acquired through certain arrangements may have special rules about when the holding period starts. Foreign residents have faced restrictions on using the discount for gains accrued after a particular date, and residents who become foreign residents also face special rules. These are specific areas where the ATO guidance should be reviewed.
A taxpayer cannot use the discount together with the older indexation method for the same gain, but may choose whichever is better for eligible pre-1999 assets. Small business owners may apply the 50% active asset reduction after the general discount where eligible, which can lead to a significantly reduced gain, alongside the other small business concessions.
For trusts, the way the discount flows to beneficiaries depends on the trust deed and distribution decisions. Keep records of acquisition dates, because proving the 12 month period is the taxpayer's responsibility. This is general information only, so confirm how the discount works in your situation with the ATO or a registered tax professional.
Worked example
Chloe buys shares on 10 March 2023 and sells them on 15 April 2025, producing a capital gain of $20,000. She also has a $4,000 capital loss from earlier. She applies the loss first: $20,000 - $4,000 = $16,000. Because she held the shares more than 12 months, she applies the 50% discount, giving a net capital gain of $8,000 that is added to her assessable income.
Practical tips
- Check your acquisition and event dates before selling, since being a day short of 12 months removes the discount.
- Apply capital losses before the discount, not after.
- Remember companies cannot claim the discount, so structure matters when holding assets.