What is capital gains tax?



This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

End of attention

Capital gains tax affects your income tax liability because your assessable income includes any net capital gain you made for the income year. Your net capital gain is the total of your capital gains for the year reduced by your capital losses.

Capital gains tax applies when certain events or transactions happen. These events or transactions are referred to as 'CGT events'. As a general rule, you can only make a capital gain or loss if a CGT event happens.

To determine whether you have an income tax liability on a net capital gain - referred to in this guide for convenience as 'capital gains tax' or 'CGT' - you need to know:

  • whether a CGT event has happened
  • the time of the CGT event
  • how to calculate the capital gain or loss
  • whether there is any exception, exemption, discount or other concession which allows you to reduce or disregard the capital gain or loss
  • whether any roll-over applies to defer or disregard your CGT liability.

Generally, any capital gain or loss you make in relation to a CGT event is disregarded for a pre-CGT asset - that is, an asset you acquired before 20 September 1985.

If a CGT event involving plant happened after 11.45 am on 21 September 1999 any capital gain or loss you make is also disregarded. Other income tax provisions apply.

Last modified: 18 Sep 2009QC 18323