CGT discount (50%)
Hold an asset over 12 months and only half the gain is taxed.
The CGT discount lets individuals and trusts halve a capital gain if they held the asset for more than 12 months before selling. So a $20,000 gain becomes a $10,000 taxable gain, added to your income and taxed at your marginal rate. Companies don’t get the discount.
Capital losses come off your gains before the discount is applied, and unused losses carry forward to future years. The twelve months is counted between the contract dates rather than the settlement dates, which is the detail that decides borderline cases.
Worked example
You buy for $40,000 and sell for $70,000 — a $30,000 gain. Held over twelve months, only $15,000 is added to your income. Carrying a $6,000 capital loss, the loss comes off first: $30,000 − $6,000 = $24,000, halved to $12,000. Applying the discount before the loss would leave $9,000 and overstate the benefit.
Common mistake
Selling a few days short of twelve months. The discount is all-or-nothing at that line, so on a $30,000 gain those few days are the difference between $15,000 and $30,000 being taxed — worth checking the contract date before signing.
Grounded in ATO guidance. Figures last checked . General information, not tax advice.
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Questions about this term
CGT discount (50%): common questions
- Do I get the CGT discount if I held the asset for exactly 12 months?
- Generally no — the asset has to be held for more than 12 months, and the discount is all-or-nothing at that line. The period is counted between the contract dates rather than the settlement dates, which is the detail that decides borderline cases. On a $30,000 gain, a few days short is the difference between $15,000 and $30,000 being taxed.
- Do I apply the CGT discount before or after a capital loss?
- After — capital losses come off your gains first, then the remainder is halved. A $30,000 gain with a $6,000 loss becomes $24,000, halved to $12,000. Applying the discount first would leave $9,000 and overstate the benefit. Unused losses carry forward to future years.
- Can a company claim the 50% CGT discount?
- No — the discount is for individuals and trusts. Companies don’t get it, so a company is taxed on the whole gain where an individual holding the same asset for more than 12 months would add only half of it to their income. The capital gains tax calculator on this site works the discounted figure for an individual.
- What happens to the discounted gain once it is worked out?
- It is added to your income and taxed at your marginal rate. A $20,000 gain held over 12 months becomes a $10,000 taxable gain, and that $10,000 sits on top of your other income for the year. The discount halves the gain; it does not change the rate the remaining half is taxed at.
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