What are the tax implications of investing in shares?

The rundown

  • When you sell shares for a profit, you make a capital gain. This gain is subject to capital gains tax (CGT).
  • If you hold shares for more than 12 months before selling, you may be eligible for a 50% CGT discount, which means you only pay tax on half of the capital gain.
  • Dividend income is considered part of your assessable income and needs to be declared on your tax return.
  • Franking credits are like tax offsets or credits that come with your dividends. They help reduce the tax you owe on your dividend income.

Investing in shares can be a great way to grow your wealth, but it's important to understand the tax implications that come with it. In Australia, there are several key areas to consider, including capital gains tax, the tax impact of dividends and Dividend Reinvestment Schemes, franking credits, and the tax impact of ETFs.

Learn everything you need to know about tax time.
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Taxation considerations are general and based on present taxation laws and may be subject to change, they do not take into account your individual objectives, financial situation or needs. You should seek independent, professional tax advice before making any decision based on this information.

Commonwealth Securities Limited (CommSec) is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 (Cth) and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

For the latest information, check the ATO website or speak to your accountant or financial advisor.

CommSec Learn is intended to provide general information of an educational nature only. Any securities or prices used in the examples given are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. Past performance is not indicative of future performance. Investing carries risk.
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