Capital Gains Tax in Victoria
Reviewed by the Commoner Law Editorial Team. Sourced from Commonwealth Acts of Parliament, federal regulations, and official government guidance. State-level information reflects each state's own Acts and court decisions. Written in plain language for general understanding — this is educational content, not legal advice. Our editorial standards
What is this right?
Capital Gains Tax (CGT) applies when you sell or dispose of a CGT asset — such as shares, investment property, cryptocurrency, or a business — for more than you paid for it. CGT is governed by Parts 3-1 and 3-3 of the ITAA 1997.
CGT is not a separate tax. Your net capital gain is added to your assessable income and taxed at your marginal rate. If you make a capital loss, you can carry it forward to offset future capital gains, but not against ordinary income.
If you hold an asset for more than 12 months, you may be entitled to the 50% CGT discount, meaning you only include half the gain in your income. This discount is available to individuals and trusts, but not companies.
Your main residence (the home you live in) is generally fully exempt from CGT under the main residence exemption. However, the exemption may be reduced if you used the property to produce income (such as renting out a room) or if it was on land larger than 2 hectares.
Small business CGT concessions can significantly reduce or eliminate CGT on the sale of active business assets if the business meets the $2 million turnover test or the $6 million net asset value test.
When does it apply?
This applies whenever you sell, gift, or dispose of a CGT asset.
- Common CGT events include selling shares, investment property, cryptocurrency, collectibles over $500, and business assets.
- CGT also applies if you receive a capital payment from a trust or company.
- The main residence exemption covers the home you live in, subject to conditions.
What to Do If You Have a Capital Gains Tax Liability in Australia
- Keep detailed records of purchase price, purchase date, improvement costs, and selling costs for every CGT asset.
- Hold assets for more than 12 months where practical to access the 50% CGT discount.
- Report all CGT events in your tax return — including cryptocurrency transactions.
- If selling a business, check if you qualify for small business CGT concessions under Division 152.
- Offset capital losses against capital gains in the same year, and carry forward any remaining losses.
- If your main residence was used for income (e.g., Airbnb), calculate the partial exemption based on the period and portion used for income.
What should you NOT do?
- Don't ignore cryptocurrency — the ATO receives data from exchanges and tracks crypto disposals.
- Don't offset capital losses against salary or wages — losses can only offset capital gains.
- Don't assume the main residence exemption applies if you rented out your home or owned it through a company or trust.
- Don't forget to include costs like agent fees, stamp duty, and legal costs in your cost base — they reduce your gain.
- Don't sell assets just before the 12-month mark — waiting a few extra days could halve your tax bill through the CGT discount.
How Victoria differs from federal law
Capital gains tax is a federal tax — Victoria does not impose a separate state CGT. However, Victorian state taxes interact with capital transactions through land transfer duty, land tax, and the Windfall Gains Tax.
- When you sell property in Victoria, the seller pays federal CGT on any capital gain. The buyer pays Victorian land transfer duty on the purchase price or market value.
- Victorian land transfer duty rates are progressive. Victoria also has a premium duty rate for properties valued over $2 million.
- Victoria's Windfall Gains Tax (from 1 July 2023) applies specifically to land that increases in value by more than $100,000 due to a government rezoning decision. The tax is 50% of the uplift above $500,000 (with a sliding scale for uplifts between $100,000 and $500,000). This is in addition to any federal CGT payable on eventual sale.
- Land tax paid to the SRO during the ownership period is added to the property's cost base for federal CGT purposes.
Additional Steps in Victoria
Report capital gains in your federal tax return. Use the SRO's duty calculator at sro.vic.gov.au for land transfer duty estimates. For Windfall Gains Tax queries, contact the SRO. Consult a tax adviser for complex transactions.
Relevant Law: Income Tax Assessment Act 1997 (Cth), Parts 3-1, 3-3; Duties Act 2000 (Vic), Chapter 2; Land Tax Act 2005 (Vic); Windfall Gains Tax Act 2021 (Vic)
Common Questions
When does capital gains tax apply?
This applies whenever you sell, gift, or dispose of a CGT asset.Common CGT events include selling shares, investment property, cryptocurrency, collectibles over $500, and business assets.CGT also applies if you receive a capital payment from a trust or company.The main residence exemption covers the home you live in, subject to conditions.
What should I do if I have made a capital gain and am unsure how to report it to the ATO in Australia?
Keep detailed records of purchase price, purchase date, improvement costs, and selling costs for every CGT asset.Hold assets for more than 12 months where practical to access the 50% CGT discount.Report all CGT events in your tax return — including cryptocurrency transactions.If selling a business, check if you qualify for small business CGT concessions under Division 152.Offset capital losses against capital gains in the same year, and carry forward any remaining losses.If your main residence was used for income (e.g., Airbnb), calculate the partial exemption based on the period and portion u...
What mistakes should I avoid with capital gains tax?
Don't ignore cryptocurrency — the ATO receives data from exchanges and tracks crypto disposals.Don't offset capital losses against salary or wages — losses can only offset capital gains.Don't assume the main residence exemption applies if you rented out your home or owned it through a company or trust.Don't forget to include costs like agent fees, stamp duty, and legal costs in your cost base — they reduce your gain.Don't sell assets just before the 12-month mark — waiting a few extra days could halve your tax bill through the CGT discount.
Capital Gains Tax in other states
Same topic, different jurisdiction. Pick the one that applies to you.