CGT Discount Rules

The 50% CGT discount is the most significant tax benefit available to Australian individual crypto investors. This guide explains how it works, who qualifies, and how PrivateACB calculates it.

What is the CGT Discount?

Under Division 115 of the ITAA 1997, Australian individual taxpayers who hold a CGT asset for more than 12 calendar months before disposing of it receive a 50% discount on the capital gain. The discount reduces the amount of the gain included in your assessable income.

This is not a preferential tax rate. Unlike the US, where long-term capital gains have lower tax rates, Australia discounts the gain itself — the discounted amount is then taxed at your marginal income tax rate.

Quick Example

You buy 1 BTC for A$40,000 on 1 January 2024 and sell for A$60,000 on 15 February 2025.

Capital gain: A$20,000
Held over 12 months? Yes (13.5 months)
After 50% discount: A$10,000
Tax: A$10,000 taxed at your marginal rate

Without the discount, you would pay tax on the full A$20,000.

Who is Eligible?

The CGT discount is available to:

Entity Type	Discount Rate	Notes
Individuals	50%	Most crypto investors
Complying super funds	33.33%	Different rate, not in PrivateACB scope
Trusts	50%	Complex distribution rules apply
Companies	Not eligible	Companies receive no CGT discount

PrivateACB applies the 50% individual discount to all eligible disposals. If you are filing through a super fund or trust, consult your tax advisor for the correct discount rate.

The 12 Calendar Month Rule

Not “365 Days”

The eligibility check uses calendar months, defined in Section 115-25 of the ITAA 1997. This is a common source of confusion because the US uses a simple “more than 365 days” check for long-term gains.

Calendar month means:

15 January 2024 + 12 calendar months = 15 January 2025
You must hold beyond that date to qualify
15 January 2025 = NOT eligible (exactly 12 months)
16 January 2025 = eligible (more than 12 months)

Edge Cases

Acquisition	Disposal	Calendar Months	Eligible?	Why
15 Jan 2024	14 Jan 2025	11 months, 30 days	No	Under 12 months
15 Jan 2024	15 Jan 2025	Exactly 12 months	No	Must be MORE than 12
15 Jan 2024	16 Jan 2025	12 months, 1 day	Yes	Exceeds 12 months
31 Jan 2024	28 Feb 2025	12 months, 28 days	Yes	Exceeds 12 months
29 Feb 2024	1 Mar 2025	12 months, 1 day	Yes	Leap year handled
15 Jul 2024	15 Jul 2025	Exactly 12 months	No	Must exceed
1 Jan 2024	2 Jan 2025	12 months, 1 day	Yes	Exceeds 12 months

How PrivateACB Checks This

PrivateACB uses a precise calendar-month algorithm (not a simple day count) to determine eligibility for each parcel. The is_long_term flag on each tax lot disposition indicates whether that specific parcel qualifies for the discount.

You can verify this in two places:

CGT Worksheet — shows discount eligibility per disposal row
Lot Tracking Report — shows holding period and eligibility per active lot

How Losses Interact with the Discount

Capital losses cannot be discounted — the discount only applies to gains. But the order in which losses are applied matters significantly:

The ATO’s Q18 Netting Order

The ATO requires that losses be applied in a specific sequence (per the Individual Tax Return, Question 18):

Offset losses against non-discount gains first — gains from assets held 12 months or less
Then offset any remaining losses against discount-eligible gains
Then apply the 50% discount to whatever discount-eligible gains remain

This ordering is taxpayer-optimal because it preserves the maximum amount of discount-eligible gains.

Why the Order Matters

Example with A$5,000 loss, A$10,000 non-discount gain, A$20,000 discount gain:

Correct (ATO method — losses to non-discount first):

Non-discount after loss: A$10,000 - A$5,000 = A$5,000
Discount gains untouched: A$20,000 x 50% = A$10,000
Net capital gain: A$15,000

Wrong (if losses applied to discount first):

Discount after loss: (A$20,000 - A$5,000) x 50% = A$7,500
Non-discount untouched: A$10,000
Net capital gain: A$17,500

The correct ATO method results in A$2,500 less assessable income. PrivateACB always uses the correct method.

How PrivateACB Applies the Discount

Automatic Detection

PrivateACB checks CGT discount eligibility per parcel during calculation. When a disposal uses multiple parcels (e.g., selling 2 BTC that came from different purchases), each parcel is independently checked.

Mixed-Lot Disposals

When a single disposal consumes parcels with different holding periods:

Parcel	Quantity	Holding Period	Gain	Discount?
Parcel A	1.0 BTC	14 months	A$5,000	Yes
Parcel B	0.5 BTC	3 months	A$2,000	No

The A$5,000 from Parcel A enters the discount-eligible pool. The A$2,000 from Parcel B enters the non-discount pool. The Q18 netting algorithm handles them separately.

Where to See It

CGT Summary Report — full Q18 netting worksheet showing total gains, losses, discount amount, and net capital gain
CGT Worksheet — per-disposal detail with a column showing discount eligibility
Dashboard Tax Summary Card — shows estimated tax with the discount model applied

What the CGT Discount is NOT

Common misconceptions:

Not a different tax rate — The US has separate short-term (ordinary) and long-term (preferential) rates. Australia discounts the gain, then taxes at your marginal rate.
Not applied before netting — Losses are netted first, then the discount is applied to remaining eligible gains.
Not mandatory — You can choose not to apply the discount (though there is rarely a reason not to).
Not based on a day count — It uses calendar months, not 365 or 366 days.
Not a loss denial rule — The discount benefits long-term holders. It does not penalise short-term traders or deny losses.

Worked Examples

Example 1: Simple Long-Term Gain

Buy 0.5 BTC on 1 August 2023 for A$20,000
Sell 0.5 BTC on 15 September 2024 for A$35,000
Holding period: 13 months, 14 days — eligible
Capital gain: A$35,000 - A$20,000 = A$15,000
After 50% discount: A$7,500 assessable

Example 2: Short-Term — No Discount

Buy 2.0 ETH on 1 March 2025 for A$8,000
Sell 2.0 ETH on 1 August 2025 for A$10,000
Holding period: 5 months — not eligible
Capital gain: A$2,000, fully assessable

Example 3: Loss — Discount Does Not Apply

Buy 1.0 SOL on 1 January 2024 for A$150
Sell 1.0 SOL on 15 March 2025 for A$100
Holding period: 14 months — but this is a loss, so discount is irrelevant
Capital loss: A$50, available to offset other gains

Example 4: Mixed Parcels With Q18 Netting

You have three disposals in FY 2024-25:

Disposal	Gain/Loss	Discount Eligible?
BTC sale	+A$20,000	Yes (held 18 months)
ETH sale	+A$5,000	No (held 6 months)
ADA sale	-A$3,000	N/A (loss)

Q18 Netting:

Non-discount gains: A$5,000 (ETH). Discount gains: A$20,000 (BTC). Losses: A$3,000 (ADA).
Apply loss to non-discount first: A$5,000 - A$3,000 = A$2,000
No remaining losses for discount gains: A$20,000 intact
Apply 50% discount: A$20,000 x 50% = A$10,000
Net capital gain: A$2,000 + A$10,000 = A$12,000

ATO References

ITAA 1997, Division 115 — CGT discount provisions
ITAA 1997, Section 115-25 — 12-month minimum ownership period
ITAA 1997, Section 115-100 — Discount percentage (50% for individuals)
ATO Individual Tax Return Instructions, Question 18 — Net capital gain calculation
ATO Guide: Capital gains tax (CGT) — Comprehensive overview
ATO Crypto Asset Guidance — Application to crypto assets