How do shares and property compare for tax purposes in Australia?

Both shares and property are subject to CGT, with the 50% discount applying to assets held over 12 months. The key structural tax differences lie in how the two assets are held, the deductions available, and how losses are treated.

Property allows negative gearing where rental losses can offset other income. Depreciation (Division 43 and Division 40) can generate paper deductions that reduce taxable income even when cash flow is neutral. However, property has higher transaction costs (stamp duty, agent fees) that form part of the cost base, and land tax and council rates are ongoing holding costs.

Shares offer no equivalent to negative gearing for typical investors (though interest on money borrowed to buy shares is deductible if the shares pay dividends). Franking credits on dividends can reduce tax liability or generate refunds. Share transaction costs are much lower. Both offer the 50% CGT discount. Shares can be traded more frequently without triggering the ATO's view that you are carrying on a business (though frequent share trading can be treated as a business with different tax rules). Neither is inherently more tax-efficient; your personal marginal rate, how you structure ownership, and your investment horizon all affect which works better for your situation.