Capital Gains Tax: What Property Owners and Business Owners Need to Know
Updated: 15 hours ago
For many Australians, Capital Gains Tax (CGT) can be one of the biggest tax liabilities they face throughout their lifetime. Whether you're selling an investment property, a business, shares, cryptocurrency, or another investment asset, understanding the CGT implications before you sell can make a significant difference to your overall tax outcome.
The reality is that many investors and business owners focus on the sale price without fully considering the tax consequences. Unfortunately, by the time advice is sought after contracts have been signed, valuable planning opportunities may have already been lost.
With recent changes to Australia's foreign resident CGT rules taking effect from 1 October 2026, now is also a timely reminder to review your CGT position before any major transaction.
What Assets Can Attract Capital Gains Tax?
While investment properties are often the first thing people think of when discussing CGT, the rules apply to a much wider range of assets, including:
Investment properties
Holiday homes
Shares and managed funds
Cryptocurrency
Businesses and business assets
Commercial property
Business goodwill
Certain contractual rights and investments
Your family home is generally exempt from CGT. However, there can be exceptions where all or part of the property has been used to generate income, such as operating a business from home or claiming certain rental deductions.
Why Planning Before the Sale Matters
One of the most common mistakes we see is clients seeking tax advice after they have already signed a contract to sell an asset.
Once a transaction has occurred, many tax planning strategies are no longer available. Seeking advice before the sale can often provide opportunities to:
Access available CGT concessions
Review ownership structures
Utilise carried-forward capital losses
Manage the timing of the sale
Improve cash flow outcomes
Reduce unexpected tax liabilities
In some cases, a simple conversation before entering into a contract can save thousands of dollars in tax.
Small Business CGT Concessions Can Deliver Significant Savings
If you're selling a business, it's important to understand that generous CGT concessions may be available.
Many business owners are unaware that, depending on their circumstances, they may be eligible to:
Reduce a capital gain by 50%
Eliminate some or all of the gain
Contribute proceeds to superannuation under specific concessions
Defer the gain to a later date
These concessions can dramatically reduce the tax payable on a business sale, but the eligibility requirements are complex and should be reviewed well before any transaction takes place.
For business owners considering retirement, succession planning, or an eventual exit strategy, early planning is particularly important.
Property Investors: Good Records Can Save You Money
When it comes time to sell an investment property, good record keeping can have a substantial impact on your CGT position.
Many investors miss legitimate opportunities to reduce their taxable gain simply because important documents have been lost over the years.
Records worth retaining include:
Purchase contracts
Settlement statements
Stamp duty records
Legal and conveyancing costs
Building and renovation expenses
Quantity surveyor reports
Depreciation schedules
Selling costs and agent commissions
These costs often form part of your property's cost base and may help reduce the capital gain when the property is sold.
Don't Overlook Capital Losses
If you've previously sold investments at a loss, those losses may be available to offset future capital gains.
Common examples include:
Shares sold at a loss
Cryptocurrency losses
Investment properties sold at a loss
Other investment assets that have declined in value
Reviewing available capital losses before selling an asset can often improve the overall tax outcome and reduce the amount of CGT payable.
Recent Changes to Foreign Resident CGT Rules
The Federal Government has strengthened Australia's foreign resident capital gains tax regime, with new measures applying from 1 October 2026.
Key changes include:
A broader definition of taxable Australian real property
Applying the principal asset test across the previous 365 days rather than only at the time of sale
New notification requirements for certain foreign resident vendors
Additional rules relating to indirect Australian property interests
A transitional 50% CGT discount for eligible foreign residents disposing of certain renewable energy assets
While these changes primarily affect foreign residents, they highlight the importance of understanding how CGT rules apply before undertaking significant transactions.
You can read more about the changes on the Australian Taxation Office website.
Questions to Ask Before You Sell
Property values, business valuations, and investment markets have changed significantly over recent years. As a result, many Australians are sitting on substantial unrealised capital gains without fully understanding the potential tax consequences.
Before selling any significant asset, it's worth asking:
What is the likely tax bill?
Are any concessions available?
Is the current ownership structure still appropriate?
Could the timing of the sale be improved?
How will the sale proceeds be used?
Should superannuation planning form part of the strategy?
The answers to these questions can significantly affect the amount of tax paid and the after-tax proceeds you ultimately receive.
How Rise Accountants Can Help
The best tax planning usually happens before a sale contract is signed.
If you're considering selling a business, investment property, shares, cryptocurrency, or another significant asset, now is the time to review your position. Understanding your likely CGT exposure, identifying available concessions, and planning ahead can help you achieve a better financial outcome.
At Rise Accountants, we help business owners and investors navigate complex CGT issues, estimate potential tax liabilities, and develop strategies that align with their broader financial goals.
A quick conversation before a sale could save you far more than you expect.
Frequently Asked Questions
What is Capital Gains Tax?
Capital Gains Tax (CGT) is the tax treatment that can apply when you dispose of certain assets and make a capital gain. Depending on your circumstances, CGT may apply to assets such as investment property, shares, cryptocurrency and business assets.
Is my family home subject to Capital Gains Tax?
Your main residence may qualify for a CGT exemption, but the outcome depends on your circumstances. If the property has been used to produce income or hasn't been your main residence for the entire ownership period, different CGT rules may apply.
When should I get advice about CGT?
Ideally, before you sign a contract or commit to selling the asset. Getting advice early gives your accountant an opportunity to review the potential CGT liability, available concessions, capital losses and the timing of the transaction before the sale takes place.
Can capital losses reduce my Capital Gains Tax?
Capital losses can generally be applied against capital gains in accordance with the CGT rules. If you've previously made losses on investments, it's worth checking whether carried-forward capital losses are available before selling another asset.
Are there CGT concessions when selling a business?
Potentially. The Australian Taxation Office has four small business CGT concessions: the 15-year exemption, 50% active asset reduction, retirement exemption and small business roll-over. Each is subject to eligibility requirements and, where relevant, additional conditions.
Can I reduce CGT by contributing money to superannuation?
In certain small business CGT circumstances, superannuation can form part of the strategy, including in relation to the small business retirement exemption. Eligibility and contribution rules need to be considered carefully before acting.
What changed for foreign residents from 1 October 2026?
From 1 October 2026, Australia's foreign resident CGT regime changed in several areas. The changes include a broader definition of taxable Australian real property, applying the principal asset test over the previous 365 days, notification requirements in certain circumstances, and a transitional 50% CGT discount for eligible foreign residents disposing of certain Australian renewable energy assets.
Why is CGT planning important before selling an asset?
Once a transaction has occurred, some planning options may no longer be available. Reviewing your position beforehand allows you to understand the likely tax implications and consider relevant concessions, capital losses and timing before committing to the sale.
