Selling shares or ETFs: a worked capital gains tax example for your return

When you sell shares or ETFs at a profit, the capital gain is added to your taxable income in the year you sign the trade (the trade date), and taxed at your marginal rate. If you held the parcel for at least 12 months, you can halve the gain with the 50% CGT discount, but only after subtracting capital losses. Applying losses to gains that do not qualify for the discount first usually produces the lowest tax. The worked example below shows the full calculation for a 2025–26 return, including a carried-forward loss, and shows how the order of losses changed the tax by almost $500.

The rules come from the CGT discount guide; this guide applies them to sales up to 30 June 2027. For shares sold from 1 July 2027, legislation passed in June 2026 replaces the 50% discount for individuals with indexation of the cost base for the period after that date and adds a 30% minimum tax on most capital gains; the gain accrued to 30 June 2027 keeps the old treatment (see changes from 1 July 2027). It builds on the step-by-step tax guide. All amounts are illustrative; this is general information, not advice.

The investor and the sales

Resident employee, salary $78,000 in 2025–26, with a $1,000 net capital loss carried forward from an earlier year.

Parcel	Bought	Cost incl. brokerage	Sold	Proceeds after brokerage	Result	Held 12 months?
A – ETF units	August 2022	$20,020	November 2025	$30,980	Gain $10,960	Yes
B – listed shares	September 2025	$6,010	April 2026	$9,000	Gain $2,990	No
C – listed shares	March 2021	$12,020	May 2026	$7,480	Loss $4,540	(irrelevant for losses)

Step-by-step calculation

Total capital losses available: current-year loss $4,540 + carried-forward $1,000 = $5,540.
Apply losses to the non-discountable gain first: parcel B $2,990 − $2,990 = $0. Losses left: $2,550.
Apply remaining losses to the discountable gain: parcel A $10,960 − $2,550 = $8,410.
Apply the 50% discount: $8,410 × 50% = $4,205.
Net capital gain: $4,205. No losses left to carry forward.
Taxable income: $78,000 + $4,205 = $82,205.
Extra tax: all of the gain falls in the 30% bracket, so about $4,205 × 32% (with Medicare levy) = $1,345.60.

Why the order matters

Order of applying losses	Net capital gain	Extra tax at 32%
Losses to parcel B first, then A (as above)	$4,205	$1,345.60
Losses to parcel A first	($10,960 − $5,540) × 50% + $2,990 = $5,700	$1,824.00

Applying losses to the discountable gain first wastes half the loss, because that gain would have been halved anyway. The tax return's capital gains section and myTax calculation let you apply losses in the order you choose. Check the ATO's guide to capital gains tax for how the labels work.

Getting the cost base right

Brokerage on purchase adds to the cost base; brokerage on sale reduces proceeds.
Dividend reinvestment plans (DRP): each reinvested dividend buys a new parcel with its own cost base and purchase date. Selling "all" your shares may include parcels held less than 12 months.
ETFs and managed funds: annual tax statements can include cost base adjustments (for example AMIT increases or decreases). Ignoring them overstates or understates the gain.
Parcels bought at different times: if you can identify which parcel you sold, you can use that parcel's cost. Keep records showing the identification; otherwise a first-in first-out approach is common.
Corporate actions such as share splits, demergers and takeovers can change cost bases. Issuers usually publish a tax guide.

The ATO receives data from share registries and brokers, so mismatches are often detected.

Timing decisions you can control

Decision	Possible tax effect	Caution
Wait until the 12-month mark passes	Halves the taxable gain	Market price may move more than the tax saved
Sell in a lower-income year (e.g. parental leave, study, retirement)	Gain taxed at a lower marginal rate	Don't let tax drive an investment decision you would not otherwise make
Realise a loss on a poor holding in the same year	Offsets gains	Selling and rebuying straight away to create a loss can be a wash sale
Contribute to super and claim a deduction	Reduces taxable income in the gain year	Caps and notice of intent rules apply; see carry-forward contributions

A large gain can also push you over thresholds for the Medicare levy surcharge, HELP repayments and Division 293, so look at the whole picture, not just the bracket.

Other things that are not capital gains

Dividends and franking credits are income, reported separately, whether or not you sell.
Share trading as a business: if you trade frequently, in volume, with a business plan, profits may be ordinary income with no discount. The ATO looks at the facts.
Employee share scheme shares have their own rules for when the discount applies to the taxing point.

FAQ

Is the CGT date the trade date or the settlement date?

For shares it is generally the date of the contract, which is the trade date, not settlement two business days later. A sale on 30 June that settles in July belongs to the earlier year.

Do I pay CGT if I reinvest the proceeds?

Yes. Reinvesting does not defer the gain for individuals.

Can I offset a capital loss against my salary?

No. Capital losses can only reduce capital gains, now or in future years.

What records should I keep?

Buy and sell contract notes, DRP statements, ETF annual tax statements and corporate action notices, for at least five years after the sale.

Sources

Australian Taxation Office — capital gains tax on shares, CGT discount, cost base, wash sales, share trading vs investing
Moneysmart — ASIC guidance on shares and ETFs
Federal Register of Legislation — Income Tax Assessment Act 1997, Division 102 and Division 115