How do I avoid capital gains tax on shares in Australia?

If you sell shares, you'll need to pay capital gains tax (CGT) on any profits you make. However, these profits may be taxed at a lower rate if the shares are held in an SMSF or superfund. Profits and earnings from shares held in SMSFs or superfunds are taxed at a rate of 15% before retirement and 0% after retirement. And if you earn franked dividends, you may also get cash rebates that offset any capital gains tax you must pay.

How much capital gains tax do you pay on shares held for 10 years in Australia?

If you hold shares for more than 12 months, you pay 50% less capital gains tax on any profits you make from selling your shares.

Do you pay capital gains tax on inherited shares?

No, you don't usually pay capital gains tax when you inherit shares, but CGT can apply when you later sell them. If the person who died acquired the shares on or after 20 September 1985, you generally take on their cost base. If they acquired them before that date, your cost base is generally the shares' market value on the day they died.

Do you pay capital gains tax on inherited shares?

No, you don't usually pay capital gains tax when you inherit shares, but CGT can apply when you later sell them. If the person who died acquired the shares on or after 20 September 1985, you generally take on their cost base. If they acquired them before that date, your cost base is generally the shares' market value on the day they died.

Capital gains tax on shares in Australia

If you sell shares and make a profit, you'll pay capital gains tax. And from July 2027, how your gains are taxed will change.
Your ATO classification as a share trader or investor significantly impacts eligible tax deductions and loss treatment.
Calculate capital gains tax by subtracting purchase and selling costs from your asset's sale price.

If you've sold shares at a profit, you might need to pay capital gains tax (CGT) when you do your tax return. Or you may be able to claim a deduction.

Depending on how often you trade shares and how the Australian Taxation Office (ATO) classifies you, you could be eligible to claim tax benefits such as franking credit rebates and deductions on trading-related costs.

Whether you're a trader or investor, this guide explains how much tax you need to pay and whether you're eligible for benefits.

First, what is capital gains tax?

Capital gains refer to selling an investment for more than the cost you spent to acquire it. So, when your shares increase in value and you decide to sell them, you make a capital gain.

You'll need to pay tax on any capital gains you make (minus losses), called capital gains tax.

How you actually pay this tax is complicated. Right now, a 50% CGT discount is still in effect if you've held your shares for over 12 months.

But this discount ends on 30 June 2027. From then on, a new taxation method applies.

Note: Capital gains tax is not a separate tax. The money you earn from selling an asset instead becomes part of your overall taxable income (along with your salary and other forms of income). And then you pay tax based on your marginal tax rate.

Do I need to pay tax on shares?

Yes, any transaction made can be counted as a separate tax event. As such you will need to pay taxes on any profits made from trading including dividends and selling shares.

Any profits that you make are added to your total taxable income for the year.

So, if you're paid a salary of $49,000 and you make $1,000 from trading shares – your total taxable income becomes $50,000.

It's worth noting, profits aren't taxable until you actually sell your shares. If you sell before 30 June, your profits will be included as your taxable income this financial year and if you sell after 30 June, it's added to the following tax return.

Note: If you're classified as a "share trader" for business purposes, the tax implications are a little different because you can claim any losses accrued from trading shares as a tax deduction (see below).

What about dividends?

Dividends are included in your total taxable income – in fact, the ATO will already have a record of the dividends you've earned throughout the year and will have automatically added this to your income.

What are franking credits?

Franking credits can be used by Australian shareholders as a tax break on share dividend payments. Franking credits stop dividend payments from being taxed twice and can be claimed as a tax refund by shareholders depending on the shareholder’s marginal tax rate.

You can read more about franking credits in our comprehensive guide.

How to calculate tax on shares sold before 1 July 2027

Any profit you make from share trading is added to your total taxable income. The tax you pay on your shares will depend on which tax bracket you fit into based on this total income.

If you're a casual investor, your profits are calculated as total profits minus total losses.

As an example let's say you bought 1,000 shares in lithium miner Lake Resources (LKE) for 70 cents and later in the financial year sold them for 80 cents. Your taxable profit is $100.

On the flip side, you might've bought 1,000 shares in the miner but it fell from 70 cents to 50 cents and you sold it. In this situation, you'd have a $200 capital loss to offset against capital gains.

Dividends are also included. So say you bought CBA shares this financial year and decided not to sell. Then CBA paid a dividend and you made $100 in dividend profits. Assuming the first scenario where you sold LKE at 80 cents, your $100 profit and $100 dividend add $200 to your total taxable income (plus any franking credits attached to the dividend).

There are also tax benefits to long-term investing over short-term investing. If you hold shares for longer than 12 months before selling, you're only taxed on 50% of the profits you make from those shares. If you buy and sell within the same financial year, your total profits are included as taxable income.

You can work out how much CGT you may owe the ATO by using our calculator below.

Capital gains tax calculator for shares and ETFs

To use Finder's capital gains tax on shares calculator:

First, you need to state whether you've owned the stock or ETF (asset) for more than 12 months. If you've owned a stock or ETF for more than 12 months, a 50% capital gains tax discount applies.
Then you enter the purchase price (the price you paid for the stock) and then the price you sold it for.
Finally, enter your taxable income for the current year. That's your income before tax.

The capital gains Tax (CGT) is calculated by first determining if there is a capital gain, which is calculated by subtracting the purchase price of the asset, the purchase costs and the sale costs from the sale price of the asset. If there is a capital gain, the individual's total tax payable is then calculated by applying their marginal tax rate for the current financial year to their total taxable income including the capital gain (which may include a discount if held for over 12 months). The figure provided by the calculator relates to the portion of tax payable as a result of the capital gain.

Assumptions and limitations

The calculator assumes the following:
- the individual is a permanent resident of Australia for the entire current financial year
- the asset:
  - was purchased after 21 September 1991
  - is owned by the individual and not a business entity
  - is not an owner-occupied home
  - is not part of a super fund
  - is not otherwise exempt from the CGT rules
- the Medicare Levy Surcharge rate is not payable.

Disclaimer: The information provided by this calculator is only intended to provide an approximate estimate of the CGT you may need to pay. It is general in nature and does not constitute professional advice. The rules relating to CGT are complex and you should always seek professional advice in relation to your particular circumstances.

How to calculate tax on shares sold after 1 July 2027

From 1 July 2027 the capital gains tax discount is replaced with cost base indexation method. But you can still get the 50% CGT discount on the gains made from any assets held prior to these changes.

How the cost base indexation method works

The cost base indexation method factors inflation into your gains. And it also sets a minimum tax rate of 30% (even if your total income puts you below a 30% tax rate).

Let's assume you invest in shares after 1 July 2027 and then sell them, so there's no discount under the old method. In this example, you invest $100,000 in shares and then sell them for $150,000.

Under the old system, if you held the shares for 12 months you'd get a 50% discount and pay tax on $25,000 instead of $50,000.

But with this system, your cost base ($100,000) is adjusted for inflation. Let's assume inflation was around 3% over 5 years. That adds (we're simplifying these numbers a bit) $15,000 to your cost base.

So now with indexation your cost base is $115,000. Minus your sale price of $150,000, you now have a taxable gain of $35,000. This is added to your overall taxable income.

How do I lodge a tax return for shares?

Your tax return for shares is included as part of your regular tax return after 30 June.

When you lodge your annual tax return, you'll need to report any capital gains you've made on buying and selling shares throughout the financial year. Any dividends you earn will have already been added to your taxable income by the ATO.

At the end of the financial year, your broker or online share trading platform will send you a tax statement with the total profits you've earned. If you're lodging your own tax return, you'll need to include this number in your report. In the case of using a tax accountant, send the tax statements to them to work out.

If you use multiple brokers, it's a good idea to use a portfolio tracker to track total capital gains across all platforms.

How do I pay tax on robo-advice and micro-investment apps?

If you use a robo-advice or micro-investment platform such as Raiz Invest or Spaceship, you are taxed on any profits you make from your portfolio.

Like regular share trading, your profits (minus losses) are added to your total taxable income. Your platform will typically send a tax statement each year. If you've been given dividend payments, these are automatically filed with the ATO.

How to pay tax on US shares

You need to pay capital gains tax (profits minus losses) on US shares in the same way you do Australian shares, though currency conversions add another element to the equation.

When buying and selling US stocks, the capital gains is calculated immediately at the moment the trade occurs, not when you convert your currency back into AUD from USD.

The CGT calculation is made by converting USD to an AUD amount at the time of the transaction.

So say you purchased US$1,000 of Tesla shares, then sold those shares for US$1,000 a few months later – your capital gains in USD may appear to be $0, but in AUD amounts you may have either profited or lost income.

There are different tax implications depending on how often you trade shares and whether you can be classified a "share trader" for business purposes.

The ATO defines a business for tax purposes as any money-making venture where you’re not an employee. Share trading fits this definition. However, there are no black and white rules about who is a share trader and who isn’t. The ATO gives some guidelines but ultimately makes decisions on a case-by-case basis.

The ATO assesses the nature of your trading activities and your business or trading plan when deciding. This information includes how often you trade, why you make certain trade decisions and an assessment of potential investments.

If you can satisfy the ATO’s definition of being a share trader, you can claim any gains from the share market as your personal income and any losses as a tax deduction. If you’re a regular investor, your losses are deducted from your capital gains only.

Casual investors can't deduct share losses from their salary or other income. Capital losses can only reduce capital gains, and any unused net capital loss is carried forward to reduce capital gains in later years. So pay attention to capital gains tax (CGT) and the timing of the sale of shares. Any profits made after 30 June won’t be taxed until the following year.

How does the tax office define a trader?

Tax implications are different for traders and investors. The ATO will classify you as a trader if you can answer yes to the following:

You purchase shares on a regular basis in a routine way. The ATO will also look at the volume of shares traded and the size of the investment(s).
You have a trading plan. The ATO will look at whether you have a registered business and whether you have business premises and all the relevant qualifications and licences.
You make use of share trading techniques, such as market analyses.
You have a plan B in case your shares run at a loss.

Tax deductions

Share traders

Money from the sale of shares and share dividends are included in assessable income.
The costs of buying and selling shares can be claimed as a tax deduction.
Share traders can claim the costs of items such as computers, as they are necessary to making trades and keeping records. You can also claim depreciation on items costing more than $300.

Share investors

Can’t claim the purchase price of shares as a tax deduction.
Capital losses are subtracted from capital gains.
Any net profit is subject to CGT.
Can claim deductions on the prepayment of expenses such as Internet fees, seminars or subscriptions for up to 12 months in advance.

"Working out your capital gains tax can be can get complicated if you hold shares or other assets across multiple platforms. To make it easier at tax time, I use the portfolio manager Sharesight. This way I can track all of my assets in the one spot and easily work out gains vs losses. "

Kylie Purcell

Investments Analyst

Trade shares

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Finder Score	AU Trading Fee	US Trading Fee	Asset Class
9.6 Excellent Moomoo Share Trading Finder Award	9.6 Excellent	$3.00	US$0.99	ASX shares, Global shares, Options trading, US shares, ETFs	Welcome offer: Enjoy 30 days of $0 brokerage on AU and US stocks and receive up to 38 free shares when you open and fund your account and complete qualifying tasks. Offer ends 30 Nov 2026. T&Cs apply.	Trade major markets with built-in social trading tools.	Go to site View details Compare product selectionCompare	loading
8.7 Great eToro Most Loved	8.7 Great	US$2.00	US$2.00	ASX shares, Global shares, US shares, ETFs, Cryptocurrencies	$150 Reward Finder Rewards: Join Finder then sign up as a new eToro customer through Finder, deposit at least $300 and complete a trade within 60 days of account opening to receive a $150 digital Visa gift card. Ends 31 Dec 2026. T&Cs apply.	CFD service. Capital at risk. Trade a range of assets from a single account with access to social trading features.	Go to site View details Compare product selectionCompare	loading
9.3 Excellent Tiger Brokers Finder Award	9.3 Excellent	$3.00	US$2.00	ASX shares, Global shares, Options trading, US shares, ETFs	$120 Reward Finder Rewards: Join Finder then sign up to Tiger Brokers through Finder, deposit $2,000 within 7 days and complete a qualifying BUY trade within 20 days to receive a $120 digital Visa gift card. Ends 31 Dec 2026. T&Cs apply. Deposit any amount and receive $20 to trade in Tiger Brokers. Plus 4x zero brokerage trades and no FX fees on the first $2,000 you exchange every month. T&Cs apply.	Trade US, Asian and CHESS-sponsored ASX stocks, China A-class shares, plus US and Hong Kong options and ETFs.	Go to site View details Compare product selectionCompare	loading
9.8 Excellent Webull Finder Award	9.8 Excellent	$1.00	$0.00	ASX shares, Global shares, Options trading, US shares, ETFs, Cryptocurrencies	$150 Reward Finder Rewards: Join Finder then sign up to Webull as a new customer, deposit at least $2,000 in a single transaction and place at least 1 BUY order for a US-listed stock or ETF to receive a $150 digital Visa gift card. Ends 2 Dec 2026. T&Cs apply. Bonus offer: Get up to 25,000 bonus Qantas Points on eligible Webull deposits and share transfers by 31 Jan 2027. Plus, earn monthly points on your international trades. T&Cs apply.	Invest in over 15,000 shares, options, and $0 Brokerage on all U.S. and Australian Chess-Sponsored ETFs.	Go to site View details Compare product selectionCompare	loading
9.3 Excellent IG Share Trading Finder Award	9.3 Excellent	$0.00	US$0.00	ASX shares, Global shares, US shares, UK shares, ETFs	Go to site View details Compare product selectionCompare	loading
9.9 Excellent CMC Invest Finder Award	9.9 Excellent	$0.00	$0.00	ASX shares, Global shares, Options trading, US shares, mFunds, ETFs, Cryptocurrencies	Trade 40,000+ listed securities across the local markets and 15 major global exchanges.	Go to site View details Compare product selectionCompare	loading
7.5 Great Trading 212	7.5 Great	Not offered	US$0.00	US shares, ETFs	Welcome bonus: Get $100 in fractional shares when you sign up, complete account verification and invest at least $1,000 in stocks or ETFs. T&Cs apply.	Go to site View details Compare product selectionCompare	loading

Showing 7 of 7 results

Finder Score for share trading platforms

We've scored over 30 share trading platforms assessing them for their core features, fees, customer experience and accessibility. Our experts give each platform a score out of 10.

Read the full methodology

Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.

Frequently asked questions

If you sell shares, you'll need to pay capital gains tax (CGT) on any profits you make. However, these profits may be taxed at a lower rate if the shares are held in an SMSF or superfund. Profits and earnings from shares held in SMSFs or superfunds are taxed at a rate of 15% before retirement and 0% after retirement. And if you earn franked dividends, you may also get cash rebates that offset any capital gains tax you must pay.
No, you don't usually pay capital gains tax when you inherit shares, but CGT can apply when you later sell them. If the person who died acquired the shares on or after 20 September 1985, you generally take on their cost base. If they acquired them before that date, your cost base is generally the shares' market value on the day they died.
No, you don't usually pay capital gains tax when you inherit shares, but CGT can apply when you later sell them. If the person who died acquired the shares on or after 20 September 1985, you generally take on their cost base. If they acquired them before that date, your cost base is generally the shares' market value on the day they died.

Finder writers are subject matter experts and use primary sources, in-depth research and interviews with other experts to ensure you're getting accurate, up-to-date information. Articles are fact checked in line with our editorial guidelines.

Thank you for your feedback!

Written by

Kylie Purcell

Investments Analyst

Add to Preferred Sources

Kylie Purcell is an experienced investments analyst and finance journalist with over a decade of expertise in a wide range of financial products, including online trading platforms, robo-advisors, stocks, ETFs and cryptocurrencies. She is a sought-after commentator and regularly shares her insights on the AFR, Yahoo Finance, The Motley Fool, SBS and News.com.au. Kylie hosts the Investment Finder video series and actively contributes to the investment community as a judge and panellist. She holds a Master of Arts in International Journalism, a Graduate Diploma in Economics, and ASIC-recognised certifications in securities and managed investments. See full bio

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Kylie has written 166 Finder guides across topics including:

Investment strategies
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Ethical investing
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Stock and forex markets

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Tim Falk

Writer

Tim Falk is a writer for Finder, writing across a diverse range of topics. Over the course of his 20-year writing career, Tim has reported on everything from travel and personal finance to pets and TV soap operas. When he’s not staring at his computer, you can usually find him exploring the great outdoors. See full bio

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2 Responses

BobMay 24, 2024

A Taxpayer buys 13,312 BHP Shares on 17/12/2002 at a cost of $50,771 and sells 800 BHP shares on 11/07/2022 for $31,537.20. The shares have been held for 19.5 years. The cost price of the 800 shares was $3592.00.

The Capital Gain is $31,214.52 which is subject to the 50% discount.
But maybe the 15 year rule applies and the full value is exempt from tax.
Thank you.

Finder

SarahMay 24, 2024Finder

Hi Bob,

Thanks for pointing this out! The 15-year rule may apply to those who are eligible – more info on the ATO’s website here.

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Capital gains tax on shares in Australia

Find out about CGT and use our calculator to work out how much tax you owe on your shares.