How to calculate capital gains on shares in Australia

March 1, 2026

TrackMyShares Team

When you sell shares for more than you paid, you make a capital gain. In Australia, that gain is added to your assessable income and taxed at your marginal tax rate. Understanding how to calculate this correctly can save you from overpaying tax or making errors on your return.

This guide walks through the capital gains tax (CGT) calculation process step by step, with worked examples and practical tips for Australian share investors.

Disclaimer: This article is for informational purposes only and does not constitute financial or tax advice. Consult a qualified tax professional before making investment decisions based on tax considerations.

The basic formula

The capital gain on a share sale is calculated as:

Capital gain = Capital proceeds - Cost base

The capital proceeds are the amount you received from the sale, minus any selling costs like brokerage fees.

The cost base includes everything you paid to acquire and hold the shares. For most share investors, this means:

The purchase price of the shares
Brokerage fees on the purchase
Any other incidental costs of acquisition

If you are eligible for the 50% CGT discount (more on this below), you apply the discount after calculating the gain.

What goes into the cost base

The ATO defines five elements of the cost base:

Money paid for the asset (the purchase price)
Incidental costs of acquisition and disposal (brokerage fees on both the buy and sell sides)
Costs of owning the asset (rarely applicable to listed shares)
Capital expenditure to increase or preserve the asset's value (not relevant for shares)
Capital expenditure to establish, preserve, or defend title (uncommon for shares)

For the vast majority of share investors, the cost base comes down to the purchase price plus brokerage fees. Keep it simple, but keep it accurate.

Worked example: a straightforward sale

Sarah buys 500 shares of Wesfarmers (WES) at $52.00 per share through her online broker, paying $9.95 in brokerage.

Purchase cost: 500 x $52.00 = $26,000.00
Buy brokerage: $9.95
Total cost base: $26,009.95

Fourteen months later, she sells all 500 shares at $61.00 per share, paying $9.95 in brokerage.

Sale proceeds: 500 x $61.00 = $30,500.00
Sell brokerage: $9.95
Net capital proceeds: $30,490.05

Capital gain before discount: $30,490.05 - $26,009.95 = $4,480.10

Because Sarah held the shares for more than 12 months, she qualifies for the 50% CGT discount.

Discounted capital gain: $4,480.10 x 50% = $2,240.05

This $2,240.05 is the amount added to Sarah's assessable income for the financial year.

The 50% CGT discount

The CGT discount is one of the most significant tax benefits available to Australian individual investors. If you hold shares for at least 12 months and one day before selling, you only include half of the capital gain in your assessable income.

Key points about the discount:

It applies to individuals and trusts (trusts receive a 50% discount for individual beneficiaries)
SMSFs receive a reduced discount of 33.33%
Companies do not receive any CGT discount
The 12-month clock starts from the contract date of purchase (the trade date, not the settlement date)
You must have held the shares for more than 12 months, not exactly 12 months

The discount is applied after you have offset any capital losses against the gain. So if you have a $10,000 gain and a $3,000 loss, you first reduce the gain to $7,000, then apply the 50% discount to get $3,500.

Handling capital losses

If you sell shares for less than your cost base, you have a capital loss. Capital losses can only be used to offset capital gains. They cannot be deducted from your salary or other income.

Important rules for capital losses:

Losses must be offset against gains in the same financial year first
Any remaining losses can be carried forward indefinitely to offset gains in future years
You apply losses before applying the CGT discount
You cannot choose to "save" a loss for a future year if you have gains in the current year

Worked example with a capital loss

James sells two parcels of shares during the financial year:

Sale 1: Sells BHP shares for a $6,000 capital gain (held for 15 months)
Sale 2: Sells Zip Co shares for a $2,500 capital loss

First, offset the loss against the gain: $6,000 - $2,500 = $3,500

Then apply the 50% CGT discount (because BHP was held for more than 12 months): $3,500 x 50% = $1,750

James adds $1,750 to his assessable income.

CGT events

The ATO categorises different types of capital gains events. For share investors, the most common is CGT event A1, which occurs when you dispose of a CGT asset (sell your shares).

Other CGT events that may affect share investors include:

Corporate actions like takeovers, mergers, or demergers
Share buybacks
Return of capital payments (these reduce your cost base rather than being treated as income)
Rights and options expiring or being exercised

Most everyday share trading involves only CGT event A1. If you encounter a corporate action, the company usually provides a tax guide explaining how to handle it.

Using the CGT calculator

If you want to quickly check what your capital gain would be on a potential sale, the TrackMyShares CGT calculator lets you enter your purchase details, sale details, and holding period to calculate the gain, including the discount if applicable.

For ongoing tracking, a transaction-based portfolio in TrackMyShares automatically calculates your cost base and capital gains as you record your trades. When you sell, you can choose specific lots to dispose of rather than defaulting to FIFO, giving you control over which parcels are sold and whether the CGT discount applies. This means the numbers are ready when you need them at tax time, without any manual spreadsheet work.

If you have an existing trading history, you can import transactions from your broker's CSV export. There are dedicated guides for popular Australian brokers including CommSec, SelfWealth, Stake, and Superhero.

Tips for getting your CGT calculation right

Keep records from day one. Record every buy and sell transaction, including the date, number of shares, price, and brokerage. The ATO can audit your records for up to five years after you lodge your return.

Do not forget brokerage fees. They form part of your cost base (on the buy side) and reduce your capital proceeds (on the sell side). Forgetting to include them means you overstate your gain.

Watch the 12-month holding period. The difference between selling one day before and one day after the 12-month mark can cut your tax bill in half. If you are close to the threshold, it may be worth waiting.

Track your cost base for DRP shares. If you participate in a dividend reinvestment plan, each reinvestment is a separate purchase with its own cost base and acquisition date. These need to be tracked individually.

Automate your CGT tracking

Manually calculating capital gains across multiple trades and financial years is tedious and error-prone. TrackMyShares generates tax reports that break down your realised gains and losses by financial year, classify them as short-term or long-term, and calculate the discount automatically.

For a broader overview of share tracking for Australian investors, see our guide on how to track your shares in Australia.