CGT Calculation Methodology

This page explains the Australian Capital Gains Tax (CGT) calculation methodology used by the AML Workflow CGT Calculator for FY 2025/26. The interactive calculator requires JavaScript; the full methodology is presented below.

1. Determining the Capital Gain

Capital gain = Sale proceeds − Cost base. The cost base includes the original purchase price plus incidental costs of acquisition (stamp duty, legal fees, brokerage) and disposal (agent commission, conveyancing). Capital improvements made during ownership may also be added to the cost base.

2. Applying the 50% CGT Discount

Individual Australian residents and most trusts who hold an asset for more than 12 months are entitled to reduce the capital gain by 50% before including it in assessable income. Companies do not qualify. Self-managed superannuation funds receive a 33⅓% discount.

3. Offset Capital Losses

Current-year and carried-forward capital losses must be applied against capital gains before the 50% discount. Losses reduce gains dollar for dollar. Unused capital losses carry forward indefinitely.

4. Marginal Tax Rate Application

The remaining taxable capital gain is added to your total assessable income and taxed at your individual marginal rate for FY 2025/26. The calculator uses the latest ATO individual tax tables (0% up to $18,200; 19% from $18,201 to $45,000; 30% from $45,001 to $135,000; 37% from $135,001 to $190,000; 45% above $190,000). The Medicare Levy of 2% is additional.

5. Special Rules and Exemptions

The main residence exemption generally exempts a primary home from CGT. Small business CGT concessions (15-year exemption, 50% active asset reduction, retirement exemption, rollover) may apply to eligible businesses. Foreign residents are subject to different rules including the removal of the main residence exemption from 30 June 2020.

6. Data Sources and Limitations

Tax rates are sourced from the Australian Taxation Office (ato.gov.au). The calculator provides estimates only and does not account for all individual circumstances. It is not a substitute for professional tax advice from a registered tax agent. Always verify calculations with the ATO or your tax professional before relying on results.

AML Workflow — Australia's AML/CTF compliance platform for gatekeeper professions.