Short answer: you pay capital gains tax (CGT) when you sell shares at a profit, not for simply owning them, and not at all if you sell at a loss. CGT is not a separate tax. Your net capital gain for the year is added to your other income and taxed at your marginal rate (ATO: Capital gains tax).
When you do pay
You pay when two things are both true: a CGT event happens (you dispose of the shares, usually by selling them), and across the whole year your gains are more than your losses (ATO: When CGT applies to shares and units). The gain is your sale proceeds minus your cost base (what you paid plus brokerage on the buy and the sell).
When you do not pay
- You are still holding. A rising share price is not a CGT event. There is nothing to report until you sell.
- You sold at a loss. No tax, and the loss is not wasted: it offsets other capital gains, and any unused part carries forward (see capital losses on shares).
- Pre-CGT shares. Shares acquired before 20 September 1985 are generally exempt, which is rare today.
How much you pay
There is no fixed CGT rate. Your net capital gain is added to your taxable income, so it is taxed at whatever marginal rate applies to you that year. If you are an individual and held the shares for more than 12 months, you are generally taxed on only half the gain (the 50% CGT discount). Held for 12 months or less, the whole gain is taxable.
Work it out
Add up the gain or loss on each sale, offset your losses, apply the discount, and report the net figure. Our plain-English guide to CGT on shares walks through the full method, or CGT Mate does it for you from your CommSec, SelfWealth or Stake trades, entirely in your browser.