What is Capital Gains Tax and who needs to pay it?

Capital Gains Tax (CGT) is an important tax liability added to your taxable income for the financial year. It is not a separate tax. Read more to understand what it is and how the Australian Taxation Office (ATO) enforces it.

A young man holding a paper letter reading shocking, unpleasant, unexpected news feels frustrated and stressed—high tax rates. Credit: iStockphoto / fizkes/Getty Images/iStockphoto

Key Points

• Capital gains tax (CGT) is to be paid on the profit made by selling assets like property, shares, cryptocurrency.
• Profit made on selling your principal place of residence is generally exempt from CGT.
• In case of non-payment of CGT, the ATO can apply hefty penalties.

CGT is the tax levied on the profits generated from selling assets. If you have a capital gain (profit) when you sell an asset, it will increase the tax you must pay.

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