How to Calculate Capital Gains Tax on Shares and ETFs in Australia

If you've sold shares or ETFs in Australia, capital gains tax applies. CGT on shares and ETFs is one of the most common tax obligations for Australian investors — yet many people aren't sure exactly how the calculation works.

This guide walks through how to calculate CGT on shares in Australia step by step: the formula, what counts as part of your cost base, how the 50% CGT discount works, and how to report it. We'll use worked examples with real numbers so you can see exactly how Australian capital gains tax on shares is calculated.

Note: ETFs (exchange-traded funds) listed on the ASX are treated the same as shares for CGT purposes. Everything in this guide applies equally to ETFs like VAS, VDHG, IVV, and others.

The basic CGT formula for shares

At its core, calculating capital gains tax on shares in Australia comes down to a simple formula:

If the result is positive, you have a capital gain. If it's negative, you have a capital loss. The gain (after applying any discount) is added to your taxable income for the financial year and taxed at your marginal rate.

That's the headline. The detail is in two things: what makes up your cost base, and whether the 50% CGT discount applies.

What's included in the cost base and proceeds?

Your cost base is not just the purchase price of the shares. The ATO's published guidance defines five elements that can form part of the cost base, including incidental costs of acquisition. Separately, incidental costs of disposal (like sell brokerage) reduce your capital proceeds.

The distinction matters for record-keeping: buy brokerage is part of the cost base, while sell brokerage reduces your capital proceeds. The net effect on your gain or loss is the same, but keeping them separate matches how the ATO structures the calculation and how CGT Strategist reports it in your Evidence Pack.

For most retail investors buying ASX shares or ETFs through an online broker, it's simply: purchase price + buy brokerage for cost base, and sale price − sell brokerage for proceeds.

The 50% CGT discount

One of the most important parts of how to calculate CGT on shares in Australia is the 50% CGT discount. If you are an individual Australian taxpayer and you held the shares for at least 12 calendar months before selling, you can reduce your capital gain by 50%.

Key points about the 50% discount, per ATO guidance:

• The 12-month period is measured in calendar months, not days — per ATO guidance, the acquisition date is excluded and the asset must be held for at least 12 months after that date
• The discount applies to capital gains only, not to capital losses or assets held for less than 12 months

The discount is powerful. A $2,000 capital gain on shares held for 13 months becomes a $1,000 taxable gain. At a 37% marginal rate, that's $370 in tax instead of $740 — a $370 saving just from holding a little longer.

Worked example: calculating CGT on a share sale (capital gain)

Let's walk through a concrete example of how to calculate capital gains tax on shares in Australia.

Step 1: Calculate the cost base

Step 2: Calculate the capital proceeds

Step 3: Calculate the capital gain

Step 4: Apply the 50% CGT discount

The shares were held for 13 months (12+ months), so the 50% discount applies:

This $1,740.50 is added to your other taxable income for the financial year and taxed at your marginal rate. If your marginal rate is 32.5%, the tax on this gain is approximately $565.66.

Worked example: a capital loss

Not every sale results in a gain. Here's what happens when you sell at a loss.

No CGT is payable on this sale. The $529.00 capital loss can be used to offset capital gains in the same financial year.

Capital losses cannot be used to reduce other types of income (like salary or dividends) — they can only offset capital gains.

How CGT is reported - year-level netting

Capital gains tax on shares is not a separate tax. It is part of your income tax. At the end of the financial year (1 July to 30 June), all disposals are combined using the ATO year-level netting method:

1. Separate gains by discount eligibility. Gains on shares held 12+ months are discount-eligible. Gains on shares held less than 12 months are not. Losses are in their own bucket.
2. Apply losses to non-discount gains first. This is more tax-efficient because each dollar of loss removes a full dollar of taxable gain.
3. Apply any remaining losses to discount-eligible gains.
4. Apply the 50% CGT discount to whatever discount-eligible gains remain after losses.
5. Sum the result. The remaining non-discount gains plus the discounted gains equals the net capital gain, which is added to your other taxable income and reported in the capital gains section of your tax return.

This means the 50% discount is not applied to each disposal in isolation — it is calculated at the year level after losses have been netted. CGT Strategist handles this automatically and shows the full netting breakdown in the Evidence Pack. If an individual has other CGT events not contained in their portfolio (such as property, crypto, or other investments), the year-level netting would need to be recalculated by their tax professional to include all CGT events across all asset types.

Because the net capital gain is added to your other income, the effective tax rate depends on your marginal tax bracket. Someone earning $45,000 in salary will pay a lower rate on their capital gains than someone earning $180,000.

Multiple parcels: why it matters

The examples above assume a single purchase and a single sale. In practice, many investors buy the same stock multiple times — building a position over weeks, months, or years. Each purchase creates a separate parcel (or lot) with its own cost base and holding period.

When you sell, the question becomes: which parcels are you selling? Different parcels have different cost bases and different holding periods, so the CGT outcome can vary significantly depending on which parcels are allocated to the sale.

For example, if you bought 200 shares at $10.00 in January 2024 and another 200 shares at $14.00 in September 2024, then sold 200 shares at $13.00 in March 2025:

• Selling the $10.00 parcel: $3.00/share gain ($600), held 14 months → 50% discount applies → $300 taxable gain
• Selling the $14.00 parcel: $1.00/share loss ($200) → $200 capital loss (no tax payable)

The difference between a $300 taxable gain and a $200 capital loss comes down entirely to which parcel is allocated. This is called parcel selection, and the ATO allows you to choose.

For a detailed guide to parcel selection methods (FIFO, LIFO, and specific parcel selection), see: CGT Parcel Selection Methods Explained for Australian Investors

US shares and foreign currency

If you hold US shares through an Australian broker, the same CGT formula applies — but with an added layer of complexity. Both the purchase and sale must be converted to AUD for CGT purposes, using the exchange rate at the time of each transaction.

This means your capital gain is affected by two variables: the change in the share price and the change in the AUD/USD exchange rate. A stock can rise in USD but still produce a smaller AUD gain (or even a loss) if the Australian dollar strengthened over the same period.

The ATO publishes monthly exchange rates that should be used for these conversions. Getting the FX conversion right is essential for calculating capital gains tax on US shares accurately.

For a complete walkthrough of FX conversion for US shares, see: How to Calculate Capital Gains Tax on US Shares in Australia

How CGT Strategist helps

Calculating capital gains tax on shares manually is tedious and error-prone — especially when you have multiple parcels, different holding periods, and US shares with FX conversion. That's exactly what CGT Strategist was built for.

• Upload your broker CSV — CGT Strategist reads your trade history and calculates the cost base, proceeds, and capital gain or loss for every disposal
• See every parcel — view all your parcels with their individual cost bases, holding periods, and discount eligibility
• Model parcel selection — compare FIFO, LIFO, and specific parcel selection to find the best CGT outcome for each disposal
• FX conversion built in — US shares are automatically converted using ATO monthly exchange rates
• Generate your Evidence Pack — a structured PDF and Excel report showing every parcel allocation, cost base calculation, and the 50% discount applied where eligible

Modelling is free and unlimited. You only pay ($79.99 incl. GST) when you want to export your Evidence Pack for a given financial year.

Important: CGT Strategist is a calculation tool, not a tax agent. Results are based on the data you provide and should be reviewed by a registered tax professional.

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