At Lift, we get this question a lot:
“I’ve just sold my property/shares/business, how do I pay the tax?”
It’s a common misconception when it comes to Capital Gains Tax (CGT). The short answer? You don’t need to pay it immediately.
Let’s clear this up, and help you see the opportunity hidden in the timing.
Misconception: You pay CGT as soon as the asset is sold
In reality, CGT isn’t paid the moment the asset is sold.
It’s not like stamp duty at settlement it is reported and paid through your annual income tax return.
So if you sell in July 2025, that gain is declared in your 2025–26 tax return.
That means the payment due date is much later. Either:
- October 2026 (if you lodge yourself), or
- May 2027 (if you use a tax agent like us).
Example:
Let’s say you sell an investment property in July 2025, making a $50,000 capital gain.
You’ve held it for over 12 months in your own name, so you qualify for the 50% CGT discount.
Here’s the breakdown:
- Gain: $50,000
- Discounted gain: $25,000
- Add to your income: Say your salary is $70,000
- Total taxable income: $95,000
- Extra tax from the gain? Around $8,000 (based on marginal rates)
That $8,000 doesn’t need to be paid until your tax return is lodged—and that could be nearly two years later.
Planning Point: What can you do in the meantime?
This delay gives you time to make smart money moves. These can make a real difference.
Rather than letting it sit in the bank:
- Put it against your mortgage to save interest
- Use it to invest in other income-generating assets
- Plan ahead and set aside funds so the tax bill is no surprise
With higher value assets, or higher income, that tax bill will grow, but so does the opportunity to plan strategically.
Key Takeaway
If you’re planning to sell an asset, don’t panic about an instant tax bill. Instead:
-
Understand when CGT is actually payable by engaging with your advisor
-
Map out the timing of your sale
-
Make that extra time work for you
And if you’re ever unsure, give us a call. We can help you map it out clearly so there are no surprises and no scrambling when the tax return rolls around.
