Calculate capital gains tax (CGT) and dividend tax on Australian investments — includes the 50% CGT discount, franking credits, and marginal rate analysis for 2025-26.
Australian capital gains tax (CGT) is not a separate tax — your capital gain is added to your assessable income and taxed at your marginal rate. The ATO 2025-26 resident rates are: 0% on the first $18,200 (tax-free threshold); 19% from $18,201–$45,000; 32.5% from $45,001–$120,000; 37% from $120,001–$180,000; and 45% above $180,000 (plus 2% Medicare Levy). The critical benefit for long-term investors: assets held for 12 months or more qualify for the 50% CGT discount, meaning only half the capital gain is included in your assessable income.
For example, if you sell shares with a $20,000 capital gain after holding for 2 years, only $10,000 is added to your taxable income. At a 32.5% marginal rate (plus Medicare), you'd pay approximately $3,450 — an effective rate of just 17.25% on the total gain.
Australian companies pay 30% (or 25% for base rate entities) corporate tax on profits before distributing dividends. When they pass dividends to shareholders, they can attach franking credits representing the tax already paid. These franking credits are added to your assessable income but then fully offset your tax liability — meaning fully-franked dividends are not double-taxed. If your marginal rate is below the corporate rate, you receive a refund for the excess franking credits. This makes Australian fully-franked dividends particularly valuable for low-income investors, retirees on pension phase, and SMSFs.
The 50% CGT discount applies to individuals and trusts — but super funds only receive a one-third discount (effectively 10% effective CGT rate in accumulation phase). SMSFs in pension phase pay 0% CGT. If you're considering whether to hold investments personally or within super, tax treatment is a key factor — especially for assets likely to generate large capital gains. Note that the CGT discount does not apply to foreign residents, companies, or assets acquired before 20 September 1985 (pre-CGT assets).
Legitimate tax-minimisation strategies include: holding assets for 12+ months to access the 50% CGT discount; offsetting gains with capital losses from other investments; timing asset sales across financial years to spread income; using superannuation contributions to reduce taxable income below a higher marginal bracket; salary sacrificing to reduce the income on which CGT is calculated; and investing through a trust or SMSF for different tax treatment. Always consult a registered tax agent for strategies appropriate to your circumstances — the ATO scrutinises wash-sale arrangements and artificial loss-harvesting schemes.