In this guide
We all love making a profit on our investments, but no one enjoys the tax liability that comes with a windfall.
The good news is that making a super contribution could reduce your tax bill and give your retirement savings a welcome boost at the same time.
This content reflects CGT treatment that applies during the 2026–27 financial year.
From 1 July 2027, cost base indexation and a minimum 30% tax rate for any gains accrued from that date will apply. The portion of the gain that accumulated prior to 1 July 2027 is quarantined and treated according to the previous rules.
The 30% minimum tax will be waived for people receiving certain income support payments. Sellers of new residential dwellings and affordable housing may choose between indexation and the 30% minimum tax or the 50% discount method.
How capital gains are taxed
When you sell an asset for more than you paid for it, the profit is called a capital gain. If the asset was held for longer than 12 months, discount rules mean that only 50% of the gain needs to be declared on your tax return.
Taxable capital gains are added to your income and taxed along with the rest of your earnings at normal marginal income tax rates.
We often call this Capital Gains Tax (CGT), even though it is not a separate tax.
Example: Wan
Wan invested $40,000 in an exchange-traded fund (ETF) in January 2018. She sold her holdings in July 2026 for $70,000 – a gain of $30,000.
As she held the investment for longer than 12 months, Wan needs to declare a capital gain of $15,000 (50% of the profit) in her 2026–27 tax return.
Reducing CGT with personal deductible contributions
Making a tax-deductible super contribution reduces your taxable income and can assist to minimise the impact of tax on capital gains if you contribute to super in the same financial year that you make a capital gain.
It is important to remember that deductible contributions to super are taxed at the rate of 15%, or 30% if your income plus low-tax super contributions is above $250,000 for the year (Division 293 tax). To make a saving, the tax rate you pay on super contributions must be below the rate of income tax you would otherwise pay on the capital gain.
If you’re at least 18 and have not yet turned 67, you can make personal deductible contributions.
If you will be under 18 on 30 June at the end of the financial year, deductible contributions are permitted during the year if you earn income as an employee or business operator.
If you’re aged 67 or more on the day of your contribution, you can claim a deduction if you meet the work test in that financial year and you contributed either before your 75th birthday or within 28 days after the end of the month you turned 75.
Learn more about Division 293 tax and tax-deductible super contributions.
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