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The hardest part of share investing at tax time is not the maths. It is knowing which events the ATO actually cares about, and which ones you can safely ignore.
In Australia your share portfolio is taxed in two separate ways: capital gains tax (CGT) when you sell, and income tax on the dividends you receive along the way. Get both right and you avoid overpaying.
Capital gains tax when you sell
You make a capital gain or loss when you dispose of shares, most often by selling them. The gain is the difference between your sale proceeds and your cost base, which is generally what you paid plus brokerage on the way in and out.
- Capital gain: proceeds are higher than your cost base.
- Capital loss: proceeds are lower than your cost base. Losses offset gains in the same year, and any unused amount carries forward.
Hold the shares for more than 12 months before selling and you may qualify for the 50% CGT discount, which halves the taxable portion of the gain for individuals.
Income tax on dividends
Dividends are assessable income in the year you receive them. Many Australian companies pay franked dividends, which carry franking credits for tax the company has already paid. You declare the grossed-up dividend and use the franking credits to reduce your own tax bill.
A simple worked example
StepAmountBuy 1,000 shares at $10 plus $10 brokerage$10,010 cost baseSell 14 months later at $15 less $10 brokerage$14,990 proceedsCapital gain$4,980Taxable gain after the 50% discount$2,490
Only the $2,490 is added to your assessable income, because the shares were held for more than a year.
Keeping records without the spreadsheet
Your tax is only as accurate as your records, and brokers rarely hand you a finished CGT figure. Summ connects to Australian share platforms, tracks each parcel and its holding period, and produces an ATO-ready report you can hand straight to your accountant.
Get started with Summ for free.
This article is general information only and does not take your personal circumstances into account. For advice specific to your situation, speak to a registered tax agent.
The information provided on this website is general in nature and is not tax, accounting or legal advice. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider the appropriateness of the information having regard to your own objectives, financial situation and needs and seek professional advice. Summ (formerly Crypto Tax Calculator) disclaims all and any guarantees, undertakings and warranties, expressed or implied, and is not liable for any loss or damage whatsoever (including human or computer error, negligent or otherwise, or incidental or Consequential Loss or damage) arising out of, or in connection with, any use or reliance on the information or advice in this website. The user must accept sole responsibility associated with the use of the material on this site, irrespective of the purpose for which such use or results are applied. The information in this website is no substitute for specialist advice.
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