It all starts with a conversation
It’s time to stop treading water and build confidence with a better performing business.
23 Hamilton St,
Subiaco WA 6008
It’s time to stop treading water and build confidence with a better performing business.
23 Hamilton St,
Subiaco WA 6008
What if the 50% CGT discount you’ve been counting on isn’t the most effective way to protect your profit anymore? It feels like salt in the wound when the tax office takes a massive slice of the reward you earned through years of risk and hard work. We understand that confusion over the new Treasury Laws Amendment Act 2026 can make you feel stuck, but you don’t have to face these complex shifts alone. Learning how to reduce capital gains tax in australia is now about strategic timing and understanding how the 1 July 2027 transition affects your specific assets.
This guide provides a clear roadmap to help you minimize your liability and protect your investment returns or business sale profits. We will preview the shift toward cost base indexation, the expanded $10 million turnover threshold for small business concessions, and the new rules for negative gearing. By the end, you will have the financial certainty needed to maximize the cash in your pocket before you make your next move. Please note that this content is provided for general purposes only and you should always seek professional advice by speaking to a registered professional.
When you sell an asset for more than you paid for it, the Australian Taxation Office (ATO) views that profit as a form of income. This is the essence of Capital Gains Tax. It isn’t a separate, standalone tax that you pay on top of everything else. Instead, your net capital gain is added to your assessable income for the financial year, which can potentially push you into a higher tax bracket. The history and mechanics of Capital gains tax in Australia date back to 1985, and while the rules have evolved, the core principle remains the same; you’re taxed on the “gain” you’ve realized.
Most people encounter CGT when dealing with three main types of assets. These include real estate (excluding your main home), shares or units in a unit trust, and business assets like goodwill. Understanding these fundamentals is the first step in learning how to reduce capital gains tax in australia effectively. If you don’t know what triggers the tax, you can’t plan to minimize it.
A critical concept to master is the “Cost Base.” This is the total amount it cost you to reach the point of sale. It includes the purchase price plus incidental costs like stamp duty, legal fees, and even certain holding costs. Accurate record-keeping is your best defense. If you can’t prove an expense, you can’t add it to your cost base to reduce your taxable profit. Many investors feel a sense of stagnation because they lose a chunk of their returns simply due to poor paperwork. Don’t let that be you.
You also need to be aware of the “CGT Event” date. For most sales, this is the date you sign the contract, not the date the sale settles. This distinction is vital for year-end planning. Signing a contract on June 30 versus July 1 can shift your tax liability by an entire year, providing you with much-needed cash flow flexibility.
This content is provided for general purposes only and does not constitute specific financial or tax advice. Every investor’s situation is unique, and the rules can be complex. We strongly advise you to seek professional advice by speaking to a registered professional. If you have specific questions about your portfolio or business sale, you can reach out to us at KHT Contact Us for a tailored discussion.
You might already have access to powerful exemptions without realizing it. The most common is the Main Residence Exemption. Generally, your family home is exempt from CGT, provided you haven’t used it to produce income. There are also “pre-CGT” assets. If you acquired an asset before 20 September 1985, it is usually exempt from CGT entirely. For our clients in regional WA, the 2-hectare rule is particularly relevant. This allows you to claim the main residence exemption on up to two hectares of land, provided the land is used primarily for private purposes. These exemptions are the low-hanging fruit in how to reduce capital gains tax in australia, ensuring you keep more of what you’ve built.
The 50% CGT discount is a tax concession that allows eligible individuals and trusts to reduce their taxable capital gain by half, provided they have held the asset for at least 12 months. This is one of the most effective ways to protect your investment returns. If you sell too early, you’re essentially choosing to pay double the tax on your hard-earned gain. When exploring how to reduce capital gains tax in australia, your calendar is often your most valuable asset.
It’s vital to remember that structure dictates your eligibility. Companies are excluded from this discount. If you hold your assets in a company name, you’ll pay the full corporate tax rate on every dollar of the gain. This is why we focus on getting your business and investment structures right from the start. For foreign residents and temporary visa holders, the rules are even tighter. Since May 2012, the discount has been reduced or removed for many non-residents, so checking the latest ATO on the CGT discount guidelines is essential before you list an asset.
The 12-month clock starts on the date you sign the purchase contract and stops on the date you sign the sale contract. A common mistake for Perth property owners is thinking the clock stops at settlement. Settlement is just the administrative finish line; the tax office looks at the contract dates. If you’re at the 11-month mark and feeling the pressure to sell, it’s worth booking a quick chat to verify your timeline. Waiting that extra month could be the most profitable decision you make this year.
For assets bought before 21 September 1999, you might have the option to use the indexation method. This adjusts your cost base for inflation up until September 1999. In 2026, the 50% discount is almost always the superior choice because it offers a much larger reduction than the inflation adjustments from decades ago. While the discount method simply halves the gain, indexation only offsets the portion of the gain that matches inflation. Unless your gain is exceptionally small, the discount method remains the gold standard for tax reduction.
This content is provided for general purposes only. You should always seek professional advice by speaking to a registered professional before making financial decisions.
While the standard 50% discount is a great starting point, the Small business CGT concessions are where the most significant tax savings are found. For many Subiaco business owners, these rules are the difference between a modest exit and a life-changing retirement. These concessions are specifically designed to reward you for the years of risk and effort you’ve poured into your enterprise. If you’re looking for how to reduce capital gains tax in australia, these four tools can potentially bring your tax liability down to zero.
To access these benefits, you must first pass one of two entry tests. You either need to have an aggregated turnover of less than $2 million or own net assets (including those of related entities) worth less than $6 million. These thresholds are strict. If you’re hovering near these limits, the way you structure your entities is vital. We often see business owners who feel stuck in a state of stagnation because they’ve outgrown their original setup without adjusting for these tests. Our Business Accounting Services focus on aligning your structure early so you don’t miss out when it’s time to sell.
To qualify for these concessions, the asset you’re selling must be “active.” This means it’s used or held ready for use in the course of carrying on a business. A warehouse you run your manufacturing business from is an active asset. However, a residential rental property is generally considered a passive investment and won’t qualify. Interestingly, your business premises might still qualify as an active asset even if they are held in a separate entity, provided that entity is “connected” to your operating business. This level of detail is where we provide financial certainty, ensuring every part of your wealth plan works together.
This content is provided for general purposes only. We advise you to always seek professional advice by speaking to a registered professional before making any financial or tax-related decisions.
Effective tax planning isn’t just about what you sell; it’s about how you manage your entire portfolio. One of the most overlooked methods in how to reduce capital gains tax in australia is “tax loss harvesting.” This involves selling underperforming assets, such as shares that have dropped in value, to realize a capital loss. You can then use this loss to offset a capital gain made in the same financial year. If your losses exceed your gains, you can carry them forward to future years, providing a powerful shield for your future profits. This turns a financial setback into a strategic tool for growth.
Discretionary trusts offer another layer of protection and flexibility. Unlike individuals, a trust can choose which beneficiaries receive the capital gain. By distributing the gain to family members who are in lower tax brackets or have no other income, you can significantly reduce the overall tax paid by the family group. This methodical approach ensures you aren’t paying more than your fair share simply because of poor distribution choices. It’s a way to move away from operational confusion and toward a structured, valuable outcome for your family.
For long term property investors, a Self Managed Super Fund (SMSF) is a highly efficient vehicle. Capital gains within an SMSF are generally taxed at a maximum rate of 15%. If the fund has held the asset for more than 12 months, this rate effectively drops to 10%. This is often far lower than personal marginal tax rates, which can reach 45% plus levies. You can dive deeper into these structures in our Self Managed Super Fund Guide to see how they fit your long term goals.
In Perth, many high earners and FIFO workers find themselves pushed into the top tax bracket when they realize a capital gain. This can make a successful investment feel like a burden. To counter this, we often look at maximizing superannuation contributions through salary sacrifice in the same year the gain occurs. This lowers your taxable income, potentially keeping you in a lower bracket and reducing the “salt in the wound” effect of a large tax bill. Our guide on FIFO and Financial Freedom explores these specific challenges for Subiaco residents.
Estate planning is a critical part of a holistic wealth strategy. When an asset is inherited, the capital gains tax liability doesn’t necessarily disappear; it often transfers to the beneficiary. However, in many cases, the “cost base” of the asset is stepped up to its market value at the date of the previous owner’s death. This can significantly reduce the future tax bill for your heirs. Aligning your Will with your tax strategy is essential to avoid leaving a complicated mess for your family. Read our Estate Planning Guide for more on protecting your legacy.
This content is provided for general purposes only. We strongly advise you to always seek professional advice by speaking to a registered professional before making any financial or tax decisions.
At KHT Accounting & Wealth, we don’t treat tax as a mere compliance task. We believe that understanding how to reduce capital gains tax in australia is a vital component of Business Profit Improvement. Many business owners we meet in Subiaco feel a sense of stagnation, as if their hard work is being diluted by complex rules they don’t fully understand. We act as your steady guide, moving you away from that operational confusion and toward a state of financial clarity.
Our approach is built on human-centric interactions. We’re a team of experts who have navigated these same professional challenges ourselves. We don’t just provide technical data; we offer a partnership that considers your entire life and long-term goals. Whether you’re selling a family investment or a business you’ve built over decades, we provide the calm control you need to make informed decisions before you sign a contract.
We use a proprietary methodology to ensure no stone is left unturned. This process starts with a comprehensive review of your current business and investment structures. We look for opportunities to better align your assets with the concessions we’ve discussed, such as the small business CGT exemptions. One of our most valuable steps is calculating your potential liability before you ever sign a sale agreement. This foresight allows us to adjust timing or structure to maximize the cash in your pocket. You can explore how we’ve applied these steps for others in our Case Studies.
The most common mistake is waiting until after a sale to think about tax. By then, it’s often too late to implement the most effective how to reduce capital gains tax in australia strategies. Year end tax strategies are most powerful when they’re planned months before the June 30 deadline. This proactive planning is what creates true financial certainty and ensures you don’t miss out on the concessions you’ve earned through your hard work.
Financial stability and improved performance aren’t just dreams; they’re achievable goals with the right roadmap. If you’re ready to protect your gains and gain clarity over your financial future, we invite you to reach out for a simple, approachable conversation. Please contact the team at KHT Accounting & Wealth to start the process. As a reminder, this content is provided for general purposes only and you should always seek professional advice by speaking to a registered professional.
Navigating the complex landscape of 2026 tax reforms requires more than just knowing the rules; it requires a steady guide who understands your unique goals. By mastering the 12-month rule, leveraging small business concessions, and utilizing structures like discretionary trusts, you take back control of your financial destiny. Learning how to reduce capital gains tax in australia is the first step toward moving away from stagnation and toward long-term stability.
Our team of Registered Tax Agents brings local Perth expertise to every interaction, ensuring your wealth management and accounting work in total harmony. We’re here to help you achieve the financial certainty you deserve before you commit to a sale. Please remember that this content is for general purposes only and you should always seek professional advice by speaking to a registered professional.
Financial clarity is within your reach. We look forward to helping you protect what you’ve built and creating a pathway to a more valuable, successful enterprise.
No, you cannot avoid tax by selling an asset below its worth to a family member. The ATO uses the market value substitution rule, which means they’ll treat the sale as if it happened at the current market price. This rule prevents people from bypassing their obligations through private, low-cost transfers. It’s much better to use legal concessions rather than trying to artificially lower the sale price.
The six-year rule allows you to treat your former home as your main residence for up to six years after you move out, provided you use it to produce income. If you don’t rent it out, you can often claim the exemption indefinitely. This is a highly effective strategy for how to reduce capital gains tax in australia when you’re transitioning between properties or moving for work.
No, companies are not eligible for the 50% CGT discount. This specific tax break is only available to individuals and certain trusts that have held an asset for at least 12 months. Companies must pay the full corporate tax rate on any capital gains they realize. This is why choosing the right structure at the start of your investment journey is so important for your long-term wealth.
No, capital losses can only be used to offset capital gains. You cannot use a loss from a share sale or a property disposal to lower the tax you pay on your weekly wages or salary. If you don’t have any capital gains in a particular year, your loss is carried forward. You can then use it to shield gains in future financial years when you decide to sell other assets.
You should keep every receipt related to the purchase, sale, and improvement of your asset. This includes the original contract, stamp duty receipts, legal fees, and invoices for any major renovations or repairs. These costs are added to your cost base, which reduces the final taxable profit. Without these records, you might end up paying significantly more tax than necessary because you can’t prove your expenses.
Yes, the ATO views most digital assets as CGT assets rather than currency. Every time you swap one coin for another, sell crypto for cash, or purchase an NFT, a tax event occurs. It’s vital to keep a detailed log of every transaction throughout the year. Understanding these digital rules is now a core part of how to reduce capital gains tax in australia for modern investors.
The cost for professional CGT advice in Perth depends entirely on the complexity of your assets and the amount of structural planning required. Some situations involve simple calculations, while others require a deep review of business structures or international assets. We recommend requesting a quote that is tailored to your specific needs. This ensures you get the right level of expertise for your situation.
This content is provided for general purposes only and is not a substitute for specific advice. You should always seek professional advice by speaking to a registered professional regarding your personal tax situation.
Article by
Ben Elliot
I'm Ben, and I help Aussie business owners make more profit, pay less tax and build long-term wealth. I've been an accountant for over 20 years, and you can access my knowledge on things like business structures, tax planning and wealth-building through any of the channels below,
If you'd like to discuss your specific business and financial goals, my team at KHT Accounting & Wealth would be happy to have a chat! Reach out to me directly on https://calendly.com/benelliott
The information contained on this website is intended for general informational purposes only and does not constitute financial, tax, or legal advice. While KHT endeavours to keep the information up-to-date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, or reliability of the information. Any reliance you place on such information is strictly at your own risk.