How to Track Capital Gains on ASX Shares, Parcel by Parcel

Most Australian investors work out their capital gains once a year, in a hurry, from a broker statement and a spreadsheet that has drifted. It usually comes out roughly right. The trouble is that "roughly" hides two things worth real money: which parcel you actually sold, and whether the 12-month discount applied to it. Both are decided at the moment you record the trade, and both are nearly impossible to reconstruct from a year-end summary.

This guide walks through how capital gains tax on ASX shares is actually assessed — parcel by parcel — so that whatever you use to track it, you know what it has to get right. It is general information for an Australian resident individual holding shares as an investor. It is not tax advice, and your own circumstances may differ; take the result to your accountant.

Every buy is a parcel

The unit of capital gains tax is not "your BHP holding". It is each purchase you made — a parcel — with its own acquisition date and its own cost base. Buy the same stock on three occasions and you hold three parcels, and the tax office treats them as three separate assets even though your broker shows one line.

A parcel's cost base is what it cost you to acquire and to dispose of: the price you paid, plus the brokerage on the way in, plus the brokerage on the way out when you sell. Brokerage in Australia is quoted inclusive of GST, and it is the GST-inclusive figure that goes into the cost base. What is not in the cost base: dividends you received while holding, interest on a margin loan, and the cost of research or software — those are dealt with elsewhere, or not at all.

The acquisition date is the date of the contract, not the settlement two business days later. The same is true of the sale: a share sold on 29 June belongs to the financial year that ends the next day, even though the money arrives in July. Getting this wrong at year end moves a gain across a tax return.

Which parcel did you sell?

When you sell part of a holding you have bought more than once, you are selling specific parcels, and the tax office lets you choose which — provided you can show which ones you chose. This is the single biggest lever in the whole calculation, and the one a broker statement cannot help with, because the broker does not know or care.

Sell the oldest parcel first and you are most likely to qualify for the discount, but you may also be realising the largest gain. Sell the parcel with the highest cost base and you minimise this year's gain, but you may be giving up a discount. Sell the newest parcel and you might realise a loss that offsets a gain elsewhere. There is no single right answer; there is only the answer that suits your position this year, chosen deliberately.

What matters is that the choice is recorded at the time and applied consistently. A year-end reconstruction that picks whichever parcel gives the best result, with no contemporaneous record, is exactly what an auditor looks for. A tracker that matches each sale to named parcels by a stated method — oldest first, newest first, smallest gain, largest gain, or parcels you picked by hand — and keeps that record is doing the part a spreadsheet cannot.

The 12-month discount

If you held a parcel for at least twelve months before selling it, only part of the gain is taxable: half of it for an individual or a trust, and two-thirds of it for a complying superannuation fund. A company gets no discount at all. The twelve months runs from the acquisition contract date to the disposal contract date, and the tax office's published rule excludes both of those days from the count — so buying on 1 July and selling on 1 July the following year does not qualify, while selling on 2 July does.

This is why the parcel's acquisition date matters so much, and why it is decided per parcel rather than per holding. Two parcels of the same stock sold on the same day can have one discounted and one not.

The discount applies to a gain, never to a loss, and it is applied last — after losses have been taken off — which is the next thing to get right.

Losses, and the order things happen in

A capital loss can only be used against a capital gain. It cannot reduce your salary or your dividend income. If your losses for the year exceed your gains, the excess carries forward, indefinitely, to be used against gains in a future year — but only if you keep the record, because a loss you did not declare is a loss you cannot later use.

The order of operations is fixed and it favours you: losses are applied to gross gains first, and the discount is applied to whatever gain is left. Because a loss is worth more against an undiscounted gain than a discounted one, you apply losses to gains that do not qualify for the discount before you apply them to gains that do. Current-year losses are used before losses carried forward from earlier years.

A schedule that shows discounted and non-discounted gains separately, applies current-year losses before prior-year ones, and carries the remainder forward is doing this in the right order. One that shows a single net figure has probably not.

Dividends, franking credits and reinvestment plans

Dividends are income, not capital gains, and they are assessed in the year they are paid. A franked dividend comes with a franking credit — tax the company has already paid — which is added to your income and then credited against your tax. Both figures come from the dividend statement, and a tracker that totals them beside the capital gains schedule saves a second reconstruction at year end.

A dividend reinvestment plan does not avoid any of this. The dividend is still income in the year it is paid, and the shares you receive are a new parcel, acquired on the reinvestment date, with a cost base equal to the dividend reinvested. Ten years of quarterly DRP allotments is forty small parcels, each with its own date and cost base, and each one is either discounted or not when you eventually sell. This is the case where "I will work it out from the statements later" most reliably fails.

Splits, consolidations, demergers and capital returns

A share split or consolidation changes the number of shares in each parcel and the cost base per share, but not the parcel's total cost base and not its acquisition date. Your discount clock keeps running. A tracker that treats the post-split holding as newly acquired has just reset a clock that should not have moved.

A demerger is more involved: part of each parcel's cost base moves to the new company's shares, in the proportion the company publishes after the event, and the new shares generally inherit the original acquisition date. A return of capital reduces each parcel's cost base by the amount returned, and if it reduces the cost base below zero, the excess is itself a capital gain in that year.

None of this appears in a broker's trade export, because none of it is a trade. An imported history is complete only for someone who never held a stock through a corporate action, and anything worth using will let you record these events as their own kind of entry and restate the parcels the way the company's own notice says.

Keeping the record

Everything above comes down to one habit: record each trade when it happens, with the parcel it created or the parcels it consumed, and let the schedule be derived from that record rather than assembled at year end. A spreadsheet can do it if you are disciplined and hold a handful of positions. It stops being practical the first time a DRP, a demerger, or a partial sale from three parcels arrives.

Our portfolio tracker is built around exactly this model. Every buy creates a parcel; every sell is matched to parcels by the method you choose and can be re-matched if you change your mind; splits, consolidations, demergers and capital returns are recorded as their own entries and restate the parcels without resetting their dates; and what comes out is a capital gains schedule per financial year with discounted and non-discounted gains separated, losses applied in the right order, franking credits totalled beside it, and every disposal listed with its acquisition date and cost base. You can type the trades in, upload your broker's CSV, or connect Interactive Brokers and have them arrive on their own.