If you’ve held shares, an investment property or a business asset for more than 12 months and you’re an Australian resident, you can usually halve the capital gain you pay tax on. That’s the 50% CGT discount in one sentence — and it’s one of the most valuable concessions in the Australian tax system.
But the rules around who actually gets the discount, when, and at what rate are where most investors slip up. This guide covers what qualifies, what doesn’t, how the discount works for shares, property and trusts, and where you can lose it without realising.
Key Takeaways ▸ Individuals and trusts get a 50% CGT discount; complying super funds get 33.33%; companies get nothing. ▸ You must hold the asset for more than 12 months — counted from the day after acquisition to the day before the CGT event. ▸ For property and most share parcels with a contract, the CGT event is the contract date, not settlement. ▸ Foreign and temporary residents lost full access to the discount on 8 May 2012 — they now get an apportioned discount based on Australian residency days. ▸ Capital losses must be applied before the discount, not after — getting this order wrong costs you money. |
What is the 50% CGT discount?
The 50% CGT discount lets eligible taxpayers reduce a capital gain by half before adding it to assessable income. It applies to most CGT assets: listed and unlisted shares, ETFs and managed funds, residential and commercial property, business assets, and crypto.
The discount is automatic if you qualify — you don’t need to apply for it on your tax return separately. But it’s only available to certain types of taxpayer, and only after you’ve handled capital losses correctly.
Who qualifies?
Eligibility comes down to your entity type and residency:
- Australian resident individuals: full 50% discount.
- Australian resident trusts: 50% discount, with the discount typically flowing through to beneficiaries on their share of the gain.
- Complying super funds (including SMSFs): 33.33% discount.
- Companies: no discount at all.
- Foreign and temporary residents: apportioned discount only, based on Australian residency days during ownership.
This last category catches out many recent migrants and Australian expats. We’ll cover it in detail below.
The 12-month ownership rule (and the trap inside it)
To qualify for the discount, you must own the asset for at least 12 months before the CGT event. The day of acquisition and the day of the CGT event are both excluded from the count, so you actually need 12 months and two days of calendar ownership.
The “CGT event” is what trips people up:
- Shares with no contract: the CGT event happens at the time of sale (the trade date for ASX-listed shares, not the T+2 settlement date).
- Property and most share parcels with a contract: the CGT event happens on the contract date, not settlement. If you exchange contracts on a property at month 11 and settle at month 13, you don’t get the discount.
- Inherited assets: you can count the deceased’s ownership period (for assets they acquired after 20 September 1985).
- Assets acquired through a relationship breakdown: you can count your former spouse’s ownership period.
The practical takeaway: plan sales around the contract date, not settlement, and check the trade confirmation date for shares. A few extra days can mean thousands of dollars.
How the discount works for shares
For listed shares, ETFs and most managed funds, the order of operations matters:
- Calculate the capital gain (sale proceeds minus cost base, including brokerage).
- Offset any capital losses (current-year first, then prior-year carried-forward losses).
- Apply the 50% discount to what’s left.
- Add the discounted amount to your assessable income.
Worked example: Sarah’s CBA shares
Sarah is an Australian resident on a 39% marginal tax rate (including Medicare). She bought 2,000 CBA shares in March 2024 for $50,000 and sold them in May 2026 for $80,000.
- Capital gain: $30,000
- No prior capital losses to offset
- Discount applied: 50% × $30,000 = $15,000 reduction
- Net taxable gain: $15,000
- Tax payable on the gain: approximately $5,850
Without the discount, Sarah’s tax bill on the gain would have been around $11,700. The discount saves her about $5,850.
For managed funds and ETFs that distribute capital gains, the discount typically flows through on the annual tax statement — but you still need to be eligible (resident, and the unitholding rules met) to claim it.
How it works for property
The same 50% rule applies to investment property, but watch the contract dates and these specific traps:
- Main residence used for rental in the last 12 months: if you only started renting it out within 12 months of selling, no discount applies on the rental-period portion.
- Land subdivided and sold: the 12 months runs from the original land acquisition, not from the subdivision date — but new dwellings built on the land are a separate CGT asset with their own clock.
- Property bought before 21 September 1999: you can choose between the discount and the older indexation method. Run both calculations; in most cases the discount wins, but not always for very long-held assets.
Affordable housing bonus: an extra 10% discount (taking the total to 60%) applies for residential rental property used for qualifying affordable housing.
How it works for business assets
Business owners selling shares in their company or assets out of a trust may qualify for the 50% discount in addition to the four small business CGT concessions: the 15-year exemption, the 50% active asset reduction, the retirement exemption, and the small business rollover.
When the 50% CGT discount and the 50% active asset reduction both apply, the gain can effectively be reduced by 75% before any further concessions. That’s a major reason why structuring a business sale with a tax adviser well before signing matters — the eligibility tests look at the structure and your involvement at the time of the sale.
Foreign residents: the apportionment rule
If you became a foreign or temporary resident after 8 May 2012 and held a CGT asset across that change in residency, you don’t get the full discount on the gain attributable to the non-resident period.
There are generally two methods to work out the apportioned discount:
- Market value method: take the asset’s market value on 8 May 2012 (or the date you became a foreign resident, if later), and only the gain accruing during your Australian residency days qualifies for the full discount.
- Time apportionment method: split the discount based on the proportion of days you were an Australian resident during the ownership period.
The maths gets technical fast, especially for assets bought before 8 May 2012. If you’re an Australian expat planning to sell shares or property, get the calculation done before you contract — the difference between the two methods can be tens of thousands of dollars on a large gain.
Note also that most direct shares and listed investments held by foreign residents are exempt from Australian CGT altogether (because they aren’t “taxable Australian property”). The apportionment rule mainly affects Australian real property and indirect interests in property-rich entities.
Why companies don’t get the discount and what that means for structuring
A company pays tax on the full capital gain at 25% or 30% depending on its base rate entity status. There’s no 50% discount for companies, ever.
This is why holding long-term passive investments inside a private company is rarely tax-efficient for individuals. A trust with individual beneficiaries — or holding directly — usually delivers a much better after-tax outcome on a sale.
For business owners using a Bucket Co. structure, the company can still receive franked dividends efficiently, but capital gains on the company’s own assets won’t get the discount. This is a common review point we work through with clients setting up new structures or reviewing inherited ones.
How to maximise (and not lose) the discount
- Apply capital losses first, then the discount. Doing it in the wrong order inflates the discounted gain. The order is: gain minus losses, then discount.
- Time the contract, not the settlement. If you’re approaching the 12-month mark on a property, exchange contracts after the anniversary — settlement can be later.
- Consider ownership between spouses. If one partner is on a higher marginal rate, owning the asset jointly or in the lower earner’s name can significantly cut the after-discount tax. This needs to be set up at acquisition, not at sale.
- Don’t rush a sale before becoming a foreign resident. If you’re moving overseas, the timing of the sale relative to your residency status change is one of the biggest CGT decisions you’ll make.
- Keep cost base records. Brokerage, legal fees, stamp duty, capital improvements and holding costs (where not deducted) all reduce the gain before the discount applies. Lost records cost you real money.
Frequently asked questions
Does the CGT discount apply to crypto?
Yes. Bitcoin and other cryptocurrency held as an investment for more than 12 months by an Australian resident individual qualifies for the 50% discount on disposal. Each parcel acquired at a different time has its own 12-month clock.
Do SMSFs get the 50% discount?
No — complying super funds (including SMSFs) get a 33.33% discount on assets held for more than 12 months. Combined with the 15% concessional super tax rate, the effective tax rate on a discounted gain in accumulation phase is 10%. Assets supporting a fully retired pension can have an effective rate of zero.
Can I claim the discount on shares from a Dividend Reinvestment Plan?
Each DRP allocation is a separate parcel with its own acquisition date. You only get the discount on the parcels you’ve held for more than 12 months at the time of sale — the rest are taxed without the discount.
What if I made a capital loss this year do I still get the discount on other gains?
You apply the loss first, then the discount on the net gain. If your losses exceed your gains, you carry the unused losses forward to future years — there’s no discount to apply when there’s no net gain.
