How much tax do you pay on shares in Australia?

One of the most common questions Australian investors ask is: how much tax will I actually pay when I sell my shares? The answer depends on several factors, including how long you held the shares, your total taxable income, and whether the shares paid franked dividends.

This guide breaks down the tax treatment of share investments in Australia, with worked examples at different income levels so you can estimate your own position.

Disclaimer: This article is for informational purposes only and does not constitute financial or tax advice. Consult a qualified tax professional for advice specific to your circumstances.

Capital gains tax is not a separate tax

A common misconception is that capital gains tax (CGT) is a separate tax with its own rate. It is not. In Australia, your net capital gain is simply added to your assessable income for the year and taxed at your marginal tax rate.

This means the tax you pay on a share sale depends on how much other income you earned during the same financial year.

Australian tax rates for 2025-26

The individual income tax rates for the 2025-26 financial year (1 July 2025 to 30 June 2026) are:

On top of these rates, most taxpayers also pay the 2% Medicare levy, which brings the effective top marginal rate to 47%.

Your capital gain pushes up your total taxable income, which means it could push part of your income into a higher bracket.

Worked example: CGT at different income levels

Let's say you sell shares for a capital gain of $15,000 (before any discount). You held the shares for more than 12 months, so the 50% CGT discount applies, making the assessable capital gain $7,500.

Scenario 1: Low income earner

• Salary income: $40,000
• Assessable capital gain: $7,500
• Total taxable income: $47,500

Without the capital gain, all of the salary falls in the 16% bracket or below. With the gain, $2,500 of the capital gain falls in the 30% bracket (income above $45,000).

• Tax on the $5,000 portion in the 16% bracket: $800.00
• Tax on the $2,500 portion in the 30% bracket: $750.00
• Medicare levy on $7,500: $150.00
• Total tax on the capital gain: approximately $1,700.00

Scenario 2: Middle income earner

• Salary income: $90,000
• Assessable capital gain: $7,500
• Total taxable income: $97,500

The entire capital gain falls within the 30% bracket ($45,001 to $135,000).

• Tax on $7,500 at 30%: $2,250.00
• Medicare levy on $7,500: $150.00
• Total tax on the capital gain: approximately $2,400.00

Scenario 3: High income earner

• Salary income: $200,000
• Assessable capital gain: $7,500
• Total taxable income: $207,500

The entire capital gain falls in the 45% bracket ($190,001 and above).

• Tax on $7,500 at 45%: $3,375.00
• Medicare levy on $7,500: $150.00
• Total tax on the capital gain: approximately $3,525.00

The same $15,000 profit results in tax ranging from about $1,700 to $3,525, depending on your income level. This is why understanding your marginal tax rate matters.

What if you held the shares for less than 12 months?

Without the CGT discount, the full $15,000 gain would be assessable. Using the middle income scenario above:

• Tax on $15,000 at 30%: $4,500.00
• Medicare levy on $15,000: $300.00
• Total tax: approximately $4,800.00

Compared to $2,400.00 with the discount, that is an extra $2,400.00 in tax. The 50% CGT discount makes a substantial difference. For a deeper comparison, see our guide on short-term vs long-term capital gains in Australia.

Tax on dividends

When you hold Australian shares, you may receive dividend income. Dividends are included in your assessable income, but the treatment depends on whether they are franked or unfranked.

Franked dividends

Most large ASX companies pay franked dividends. A franked dividend comes with a franking credit (also called an imputation credit) that represents the company tax already paid on the profit being distributed.

Here is how it works:

1. You receive a $700 cash dividend that is fully franked
2. The franking credit is calculated as: $700 / (1 - 0.30) x 0.30 = $300
3. You include the grossed-up amount in your tax return: $700 + $300 = $1,000
4. You claim the $300 franking credit as a tax offset

If your marginal tax rate is 30% (plus 2% Medicare levy):

• Tax on $1,000 grossed-up dividend: $320.00
• Less franking credit: $300.00
• Net tax payable: $20.00

If your marginal tax rate is lower than 30% (for example, you are in the 16% bracket or earn below the tax-free threshold), you may receive a refund of the excess franking credits.

Unfranked dividends

Unfranked dividends have no franking credits attached. The full dividend amount is added to your assessable income and taxed at your marginal rate with no offset.

Some companies pay partially franked dividends, where only a portion of the dividend has franking credits. The franked and unfranked components are calculated separately.

Tax on ETF distributions

Exchange-traded funds (ETFs) like VAS, VGS, and VDHG distribute income that may include several components:

• Franked dividends (with franking credits)
• Unfranked dividends
• Foreign income
• Capital gains (which may include discounted and non-discounted components)
• Tax-deferred amounts (which reduce your cost base instead of being taxed immediately)

Your ETF provider issues an annual tax statement (called an AMMA statement) that breaks down the distribution into these components. Each component is treated differently on your tax return.

This complexity is one reason why keeping detailed records matters. If your ETF makes quarterly distributions, that is four separate events per year to track for each ETF you hold.

Capital losses offset gains

If you sold some shares at a loss during the year, those losses offset your gains before tax is calculated.

For example, if you realised $8,000 in capital gains and $3,000 in capital losses during the same financial year:

• Net capital gain: $8,000 - $3,000 = $5,000
• Apply 50% CGT discount (if applicable): $2,500
• Tax is calculated on $2,500, not $8,000

Losses that exceed your gains in a given year are carried forward to future years indefinitely. You cannot deduct net capital losses against your salary or other income. For more detail on calculating gains and losses, see our guide on how to calculate capital gains on shares in Australia.

Keeping track of it all

Between capital gains, dividend income, franking credits, and ETF distributions, the tax side of share investing can involve a lot of moving parts. Staying organised throughout the year makes tax time far less stressful.

TrackMyShares helps by:

• Tracking your cost base and capital gains automatically as you record transactions
• Classifying gains as short-term or long-term based on your actual holding periods
• Tracking dividends including franking credit information
• Projecting your dividend income month by month with the dividend calendar
• Generating tax reports you can share with your accountant

For a complete overview of setting up your portfolio, see our guide on how to track your shares in Australia.

Sign up for free and take control of your share tax reporting with TrackMyShares.