Capital Gains Tax on Property and Shares
Working out what a disposal actually costs in tax — property, shares or a business — by reconstructing the cost base properly and applying the concessions that genuinely apply.
Capital gains tax is decided by records that were created years before anyone thought about tax. A CGT event happens on disposal, but the amount depends on the cost base: what was paid, plus acquisition costs, capital improvements and certain holding costs, less anything already claimed as a deduction. Most of the work in a CGT calculation is reconstructing that history, not applying the final arithmetic.
Property is where this bites hardest. A house bought two decades ago may have had a stamp duty payment, a series of renovations, a period as a main residence and a period rented out, each affecting the calculation differently. Shares bring their own complications — dividend reinvestment plans, share splits, mergers and demergers all change the parcels held and their individual cost bases.
What a CGT engagement covers
- Cost base reconstructionAssembling purchase price, acquisition costs, capital improvements and holding costs from the records that actually exist.
- Property disposalsResidential and commercial property, including periods of main residence use and periods when the property was income-producing.
- Share and unit disposalsIdentifying parcels and their cost bases through reinvestment plans, splits, mergers and partial disposals.
- Business asset disposalsDisposals of business assets or an entire business, and consideration of whether small business CGT concessions are available.
- Concession eligibilityTesting which concessions and exemptions the taxpayer actually qualifies for, rather than assuming the common ones apply.
- Reporting in the returnEnsuring the gain or loss, and any capital losses carried forward, are reported correctly and consistently with prior years.
Who this suits
People selling an investment property. Particularly where the property was once a home, was rented for part of its life, or has had significant work done to it.
Investors realising a share portfolio. Where holdings were built up over years through multiple purchases or reinvested dividends and the parcels need untangling.
Business owners exiting. Where a business or its assets are being sold and the CGT position is material to what the owner actually walks away with.
How a calculation is done
Establish the CGT event
What was disposed of, when, and on what terms. The date matters, because it fixes which year the gain falls in.
Reconstruct the cost base
The slow part. Purchase documents, improvement invoices and prior tax treatment are assembled into a defensible cost base.
Test the concessions
Which exemptions, discounts or concessions are genuinely available on these facts — and which are commonly assumed but do not apply.
Calculate and document
The gain or loss is calculated and documented with the working papers retained, so the position can be supported if questioned.
This page deals with the disposal itself. The deductions available while an investment property is held — interest, depreciation and ongoing costs — sit under negative gearing and investment property tax. Once calculated, a capital gain is reported in the taxpayer’s return, prepared under taxation services. Assets acquired through an inheritance follow their own rules, which are dealt with alongside deceased estate returns.
Works well with
Common questions
Is there a discount for holding an asset a long time?
I have lost the paperwork from when I bought it. What now?
Does selling my own home trigger capital gains tax?
Speak to a chartered accountant
Tell us what you need and we’ll let you know whether we can help, what it involves and what it costs — before you commit to anything.