Capital Gain
A capital gain is the profit you make when you sell a stock for more than you paid.
Quick Reference:
Sale price – purchase price. Taxable. Opposite to capital loss.
Expanded Explanation:
If you buy shares for $5000 and later sell them for $8000, the difference of $3000 is your capital gain. This is the simplest was investors make money in the stock market.
In Australia, capital gains are added to your taxable income. If you held the shares for more than 12 months, you may qualify for a 50% discount on the taxable amount. This encourages long term investing. Beginners should understand that capital gains are not “realised” until you actually sell. A stock may rise in value, but until you sell, the gain is only on paper.
Note: The information related to taxation is relevant at the time of writting (23/09/2025).