Maximise Returns, Minimise CGT: A Plain-English Guide for Australian Investors

The only return that ever reaches your bank account is your after-tax return. For most investors, the biggest tax on a good investment isn't income tax along the way — it's capital gains tax (CGT) when you finally sell. The good news: a handful of simple, legitimate strategies can meaningfully lift what you keep.

This is a plain-English guide to keeping more of your gains, using the rules that apply in the 2026–27 financial year. We'll walk through four levers — time, ownership, losses and timing — with worked examples and simple charts, then cover an important change coming to the CGT discount from 1 July 2027 that makes this year worth paying attention to. It builds on our guides to shares versus property and diversification.

First, CGT in one minute

When you sell an investment (shares, an ETF, an investment property, crypto) for more than it cost, the profit is a capital gain. It isn't taxed at a separate "CGT rate" — instead, the gain is added to your taxable income for the year and taxed at your marginal rate. Sell at a loss and you make a capital loss, which can be used to reduce other capital gains (now or in future years), but not your salary.

Two features do the heavy lifting for investors:

• The 50% CGT discount. If you're an individual (or a trust) and you've held the asset for more than 12 months, only half the gain is taxed.
• Your marginal rate matters enormously. The same gain is taxed very differently depending on your income. Here are the resident rates for 2026–27:

Most taxpayers also pay the 2% Medicare levy on top, so a top-bracket investor effectively faces 47%. Rates are progressive — each slice of income is taxed at its own rate, not your whole income at the top rate.

Strategy 1 — Let the clock do the work

The 12-month rule is the biggest, easiest win in the whole system, and it costs nothing but patience. Cross the 12-month line and half your gain simply stops being taxable.

Worked example. Maya is a high earner on the top marginal rate (47% including Medicare). She has a $50,000 gain on some shares.

• Sells at 11 months (no discount): the full $50,000 is taxed at 47% → $23,500 tax, leaving $26,500.
• Sells at 13 months (50% discount): only $25,000 is taxed at 47% → $11,750 tax, leaving $38,250.

Waiting past the 12-month mark keeps an extra $11,750 in her pocket on exactly the same investment.

The catch is the obvious one: don't hang on to a deteriorating investment just to reach 12 months if the price is falling faster than the tax saving. More on that below.

Strategy 2 — Who owns the asset changes the tax

Because CGT is charged at the owner's marginal rate, the same gain can attract wildly different tax depending on who holds the asset. Consider Maya's $50,000 gain (held > 12 months, so the 50% discount applies) in four different hands:

Why the gap? A lower-earning spouse sits in a lower bracket, so their half-gain is taxed less. A complying super fund gets a one-third CGT discount and a 15% rate, which works out to an effective 10% on a long-held gain — and assets supporting a retirement-phase pension are generally tax-free. This is a big reason superannuation is such a tax-effective long-term home for growth assets.

Strategy 3 — Put your losses to work

Capital losses are an asset. In a year where you've realised a gain, deliberately selling an underperformer to "bank" its loss — sometimes called tax-loss harvesting — reduces the gain you're taxed on. Unused losses aren't wasted either: they carry forward indefinitely to offset future gains.

One rule matters more than any other here, and it's widely misunderstood: capital losses come off the gross gain before the 50% discount is applied. Applying the loss first, then halving, is what makes it so effective.

Worked example. Daniel is on a 39% marginal rate (37% + Medicare). This year he has a $30,000 gain on shares held more than 12 months, and a holding that's underwater by $10,000.

• Does nothing: $30,000 gain → 50% discount → $15,000 taxed at 39% → $5,850 tax.
• Sells the underperformer to crystallise the $10,000 loss: $30,000 − $10,000 = $20,000 → 50% discount → $10,000 taxed at 39% → $3,900 tax.

Same portfolio value, $1,950 less tax — and Daniel still holds cash he can reinvest into a different, better-suited holding.

A word of warning: selling purely to book a loss and then buying the same asset straight back is a "wash sale". The ATO treats it as tax avoidance and can deny the loss. If you want to stay invested, change the exposure (a different fund or company) or leave a genuine gap — and get advice.

Strategy 4 — Time the sale, and spread it out

Because a gain stacks on top of your other income, when you sell can be as important as the discount itself. A few practical moves:

• Sell in a low-income year. A career break, parental leave, a gap year, semi-retirement or the first year of retirement can drop you into a lower bracket — the perfect time to realise a large gain.
• Straddle two financial years. Selling part of a holding before 30 June and the rest on 1 July splits the gain across two years, which can keep each slice out of a higher bracket. Just remember it's the contract date, not settlement, that fixes the CGT year.
• Offset a big gain with a deduction. A concessional (deductible) super contribution in the same year can reduce the taxable income the gain is sitting on — subject to the caps.

The golden rule: don't let the tax tail wag the dog

Every strategy here is about keeping more of a good result. None of them is a reason to hold a bad investment. The 50% discount saves you a fraction of a gain; a falling price can cost you the lot. Decide first whether an asset still belongs in your portfolio — then, and only then, arrange the sale to be as tax-efficient as possible.

The best investors don't ask "how do I avoid tax?" They ask "what's the right investment decision — and how do I make it tax-efficiently?" The order matters.

One more reason 2026–27 matters: the discount is changing

There's a timing angle to all of this. In the 2026–27 Federal Budget, the Government announced that the 50% CGT discount will be replaced from 1 July 2027 — for individuals, trusts and complying super funds — with cost-base indexation (which lifts your cost base for inflation) plus a 30% minimum tax on the net gain. The headline points from the announcement:

• The full 50% discount is expected to remain for assets bought and sold before 1 July 2027.
• Assets bought before but sold after that date fall under transitional rules.
• Pensioners and income-support recipients are slated to be exempt from the 30% minimum, and there are carve-outs for new and affordable housing.

This is an announced measure, not yet law, and the detail can change as it's legislated. But it does mean the current, generous 50% discount can't be taken for granted beyond this financial year — which makes 2026–27 a sensible time to review any large unrealised gains with a professional, rather than a reason to rush. For context on why rule changes reward planning, see when the rules change, advice pays.

Where advice fits

CGT is one of the few areas where a couple of decisions — a sale date, whose name an asset is in, whether to bank a loss — can be worth thousands. The maths above is deliberately simplified (a large gain can push you into a higher bracket, and everyone's situation differs). A licensed financial adviser or registered tax agent can model your actual numbers, coordinate with your SMSF or tax position, and make sure a tax-driven move doesn't quietly undermine the investment strategy behind it.

Sources

• ATO — CGT discount
• ATO — How to calculate your CGT (order of losses and the discount)
• ATO — How SMSFs are taxed (one-third CGT discount)
• SuperGuide — Australian income tax rates and brackets (2026–27)
• Chartered Accountants ANZ — Federal Budget 2026–27: proposed capital gains tax changes
• Pitcher Partners — Federal Budget 2026–27: a fundamental shift in CGT
• PwC Australia — 2026–27 Federal Budget: CGT and housing tax reform
• BDO — Changes to the capital gains tax discount