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Investment Income and Capital Gains

Shares, ETFs/managed funds, crypto and unit holdings can create income (dividends/distributions/interest) and capital gains or losses. The tax outcome often comes down to the details: purchase parcels, dates, fees, corporate actions, and the paperwork you keep.

Why it matters

This is one of the easiest areas to get wrong — and one of the easiest to fix if the records are clean.

Correct tax outcome

Good records support the right cost base, the right discount (when eligible), and the right offsets.

ATO matching

Investment income is commonly reported to the ATO by third parties. Missing items can trigger notices.

Better decisions

Understanding realised vs unrealised gains helps with timing of sales, loss harvesting, and cash planning.

Tell it like it is: most CGT errors are record-keeping problems (missing brokerage, missing parcels, wrong dates).

Investment income: what commonly shows up

Even if you don’t sell anything, you may still have taxable investment income.

Common types

  • Dividends (often with franking credits).
  • Managed fund / ETF distributions (annual tax statements are key).
  • Interest income (bank accounts, bonds, term deposits).
  • Foreign income and foreign tax withheld (where applicable).
  • Crypto staking / yield products (treatment depends on facts).

Best practice

  • Keep annual tax statements and dividend statements.
  • Track DRP parcels (DRP creates new parcels and affects cost base).
  • Keep contract notes/confirmations for every buy and sell (includes fees).
  • For crypto: export exchange reports regularly and keep wallet addresses/transfer notes.
Quick note: managed funds and ETFs
Managed funds/ETFs provide annual tax statements that break down taxable components (and sometimes CGT components inside the fund). The statement is the key document — don’t guess the numbers.

Capital gains basics (shares, crypto, units)

In simple terms: CGT is tax on the profit when you dispose of a CGT asset.

Simple gain calculation

  • Proceeds (sale price) minus cost base (purchase price plus eligible costs like brokerage/fees).
  • If proceeds > cost base → capital gain.
  • If proceeds < cost base → capital loss (generally offsets capital gains, not wages).

CGT discount (common but not automatic)

  • Individuals and trusts may be eligible for a discount if held at least 12 months (subject to rules).
  • Companies generally do not receive the CGT discount.
  • Super funds have different treatment (often a 1/3 discount where eligible).
Important: CGT can be affected by parcel selection, corporate actions, cost base adjustments, residency, and other factors. The estimator below is for rough planning only.

Common pitfalls (and how they happen)

These are the traps we see most often with shares, crypto and unit holdings.

Shares / ETFs / unit holdings

  • Forgetting brokerage and fees (changes the result).
  • Not tracking multiple parcels bought at different prices.
  • Ignoring DRP parcels (different dates and costs).
  • Missing corporate actions (splits, consolidations, return of capital).
  • Using the wrong sale date (contract date usually drives CGT timing).

Crypto

  • Not keeping exchange and wallet records.
  • Swaps (crypto-to-crypto) not recorded as a disposal in many cases.
  • Losing track of transfers between wallets/exchanges.
  • Fees ignored (trading fees can affect proceeds/cost base).
  • Assuming “not taxable until cash out” (often not correct).
Hard truth: if you can’t prove the cost base, you risk paying more tax than you should.

Best-practice habits

You do not need a perfect system — you need a consistent one.

Record keeping checklist

Tax planning hygiene

Case studies (good and bad)

Similar investors. Different record keeping. Very different outcomes.
Good case study: “Clean parcels, clean result”Best practice

An investor buys ETFs over time, saves contract notes, and keeps annual tax statements. When they sell part of a holding, they can identify the correct parcels and include brokerage.

We calculate the gain correctly, apply the CGT discount where eligible, and use carried-forward capital losses where available.

Outcome: correct tax, minimal ATO risk, and no last-minute scramble for missing documents.

Bad case study: “App screenshot accounting”Avoid this

An investor trades shares and crypto across multiple platforms but only keeps app screenshots. No contract notes, no exchange exports, and no clear transfer history.

When ATO data matching flags disposals, the numbers don’t reconcile. The clean-up is time-consuming and can result in higher tax if records cannot be substantiated.

Outcome: stress, higher compliance risk, and potentially paying more tax than necessary.

Capital gains estimator (individuals only — shares / crypto / unit holdings)

Enter your expected taxable income for the year (before the sale), then add the buy/sell details. This will estimate the extra tax from the sale.
This is a simple estimator for one disposal (one parcel). It uses Australian resident income tax rates and assumes you are an individual. It ignores Medicare levy, Medicare Levy Surcharge, HELP/HECS, offsets, rebates and any other income/deductions. Use it for rough planning only.

Estimated result

Capital gain / loss (before losses)
$0
Net gain after capital losses
$0
CGT discount eligibility (50%)
—
Taxable capital gain (after discount, if eligible)
$0
Estimated tax on base income
$0
Estimated tax incl. taxable capital gain
$0
Estimated extra tax due to the sale
$0
Notes
Enter figures and calculate.
What this estimator does (and does not) do
This estimator is suitable for a single buy/sell event (one parcel) and includes basic fees. It does not handle multiple parcels, DRP history, corporate actions, complex managed fund components, foreign currency conversion, residency changes, or the ATO “share trader” rules. For anything messy, we should do a proper CGT calculation.

Official Australian resources

If you want to go deeper, these pages are the starting point.

General information only. This page is not legal or financial advice and does not consider your specific circumstances.

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