Twelve Months and a Day, and the Gain Halves
An individual who has held an asset for more than twelve months pays capital gains tax on half the gain. Inside a superannuation fund the discount is one third, giving an effective rate of 10% in accumulation and nil in retirement phase. The clock runs from the acquisition date to the contract date of the sale, and being a day short costs half the concession.
- The answer: Individuals discount a gain by 50% where the asset was held more than twelve months; complying super funds discount by one third.
- The trap: The period is measured from acquisition to the contract date of the sale, not to settlement. Exactly twelve months is not more than twelve months.
- The recommendation: Check the acquisition dates of each parcel before selling. Shares bought in tranches have different dates and only some may qualify.
Where the AI summary above gets this wrong
"You get a 50% capital gains tax discount if you hold an investment for a year."
That's surface-true. Here's what it misses:
- It is more than twelve months, not a year — The asset must be held for more than twelve months. A sale contracted on the anniversary itself does not qualify, which is a genuine trap on a deliberately timed sale.
- Inside super the discount is one third — A complying super fund discounts by one third, giving an effective 10% rate in accumulation. In retirement phase there is no tax to discount.
01 How the discount is applied
The gain is calculated first — proceeds less cost base — then reduced by any capital losses, and only then discounted. That order matters, because applying a loss to a discounted gain wastes half of the loss.
For an individual the discount is 50%; for a complying superannuation fund it is one third, which against the 15% fund rate produces an effective 10%. Companies get no discount at all.
The discounted amount is added to your assessable income for the year and taxed at your marginal rate. It is not taxed separately, which is why a large gain reaches the higher brackets on its own.
Source: ATO — CGT discount
02 When the clock starts and stops
It starts on the acquisition date — for shares, the date of the purchase contract — and ends on the contract date of the sale rather than settlement. That is the same rule that makes the contract date the lever for moving a gain between income years.
Each parcel has its own date. Shares accumulated over several years, or through a reinvestment plan, are many parcels with many dates, and a sale can include some that qualify and some that do not.
Where parcels are not identified, a default identification method applies. Choosing which parcels to sell is permitted and is worth doing deliberately, because it changes both the gain and whether the discount applies.
Shows: the capital gains tax on a gain with and without the twelve-month discount, at your marginal rate. Ignores: capital losses, which are applied before the discount, the Medicare levy, and the progressive scale, which a large gain moves you through.
Source: ATO — Capital gains tax
03 Inherited and transferred assets
An inherited asset carries the deceased's acquisition date, so a beneficiary satisfies the twelve-month rule immediately even on a sale shortly after death — the position is set out in the inherited cost base reference.
An asset transferred under a family law settlement generally carries a rollover, so the receiving spouse inherits both the cost base and the acquisition date rather than triggering a gain on transfer.
A transfer between spouses outside a settlement is a disposal at market value and does trigger a gain, with a fresh acquisition date for the receiving spouse. That is why moving assets between partners shortly before a sale rarely helps.
The parcel dates are the part people skip. A holding built up over five years is not one asset — it is a dozen parcels with a dozen acquisition dates and a dozen cost bases, and which ones you sell changes both the gain and whether the discount applies. Choosing deliberately is free and almost nobody does it.
FAQ
How do I use the 50% CGT discount by holding shares for more than 12 months?
Hold the asset for more than twelve months, measured from the acquisition date to the contract date of the sale. The gain, after any capital losses, is then halved before being added to your assessable income.
How does the one-third CGT discount work for assets held inside my super fund?
A complying super fund discounts a gain on an asset held more than twelve months by one third, which against the 15% fund rate gives an effective 10%. In retirement phase there is no tax to discount.
Does exactly twelve months qualify?
No. The asset must be held for more than twelve months, so a contract on the anniversary itself does not qualify. That is a genuine trap on a deliberately timed sale.
Sources
Regulator references
- ATO — CGT discount · Australian Taxation Office · 2026The CGT discount on assets held beyond the qualifying period, and who can claim it.Last verified: 2026-09-07
- ATO — Capital gains tax · Australian Taxation Office · 2026Capital gains tax: the events that trigger it and how the gain is worked out.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.