For Australian individual investors who hold ASX shares as investments, brokerage reduces returns as a cash cost on both purchases and sales. Eligible brokerage may also be included in the shares’ cost base when calculating a capital gain or loss. Dividends are generally assessable income, and eligible franking credits are included in assessable income with a corresponding tax offset. The result is that share-price movement alone does not show what you have earned after brokerage and tax.
How brokerage changes your investment result
Brokerage is charged when you buy or sell shares. Count each transaction separately: purchase brokerage increases the cash needed to invest, while sale brokerage reduces the cash you receive. Your broker’s current schedule determines the actual amount; the examples below explain tax treatment and are not fee quotes.
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For a simple pre-tax result, add sale proceeds and dividends received, then subtract the original cash invested and any other holding costs you choose to include. State whether your calculation accounts for reinvested dividends, inflation, foreign exchange or ongoing account fees; omitting them can make comparisons misleading.
An ATO cost-base example
In its Personal investors guide to capital gains tax 2025, the Australian Taxation Office (ATO) gives an example in which Fred buys 1,000 shares for $5,000 and pays $50 brokerage on the purchase and $50 on the sale. The acquisition brokerage is included in the $5,100 cost base. This illustrates how eligible transaction costs can affect a capital-gains calculation; it does not describe a typical or current brokerage rate. ATO: Personal investors guide to capital gains tax 2025.
How brokerage and tax affect capital gains
The ATO describes capital gains tax (CGT) as tax on profits from disposing of assets, including shares, and says CGT is part of income tax rather than a separate tax. Broadly, a capital gain is determined by comparing capital proceeds with the relevant cost base. The cost base can include eligible incidental costs of acquiring or disposing of an asset, such as brokerage, and may require other adjustments. ATO: Personal investors guide to capital gains tax 2025.
Shares bought at different times are separate parcels. Keep each parcel’s acquisition date, purchase price and costs so you can identify which shares were disposed of and calculate the relevant cost base. A capital loss can generally be used against capital gains in the current or a future year, subject to the rules. An eligible individual may be able to apply the 50% CGT discount to a qualifying gain on an asset held for at least 12 months. Apply capital losses and the relevant CGT method in the required order; the discount reduces the eligible gain included in the net capital gain calculation, not the investor’s tax rate by 50%. ATO: Capital gains tax guide and worksheet example.
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A discount example is not a personal tax estimate
The ATO’s 2022–23 worksheet example starts with a $5,000 gain, subtracts $3,500 in carried-forward capital losses to leave $1,500, then applies the 50% discount to arrive at a $750 net capital gain. These figures illustrate the calculation for that income year; they do not estimate a current investor’s tax. The resulting net capital gain is considered within the taxpayer’s overall income-tax position.
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Dividends are generally included in assessable income. If a dividend is franked and you are eligible to claim the franking credit, the credit is also included in assessable income and a corresponding tax offset applies. Holding-period and related-payment rules can restrict eligibility, so a franking credit should not be treated as an automatic cash rebate for every shareholder. The ATO’s cited dividend instructions cover the 2022–23 income year; check the instructions for the relevant year. ATO: Individual tax return instructions 2023.
Because dividends and eligible credits have different roles in the calculation, gross dividends alone are not enough to determine final tax payable. Use the dividend statement and consider your other income and circumstances when working out the tax effect.
A practical way to compare returns after costs and tax
- Record the purchase: note the parcel, purchase value, date, brokerage and other applicable acquisition costs.
- Record income: capture dividends and franking-credit details from dividend statements, including the relevant income year.
- Record the sale: note proceeds, the parcel disposed of, sale date, brokerage and other applicable disposal costs.
- Work out the pre-tax result: calculate sale proceeds after sale costs, add dividends received and subtract the original cash invested and any specified holding costs.
- Calculate the taxable capital gain or loss: identify the relevant parcel, compare proceeds with its adjusted cost base, then apply losses and any eligible CGT treatment in the required order.
- Account for dividend tax treatment: include dividends and eligible franking credits as required, and apply the corresponding offset where available.
- Assess the after-tax result: account for the investment’s tax effects within your tax position for the relevant income year. Do not multiply every component of a return by one assumed rate to estimate personal tax.
Keep trade confirmations, brokerage records, parcel dates and dividend statements together. They support both the return calculation and the tax records needed to explain it. A ledger can help organise those details, but it is not an official ATO requirement and does not replace source documents or appropriate tax advice.
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How to compare brokers on cost and service
There is no single brokerage figure that applies to all investors. Compare the fee for your expected order size and trading frequency, including minimum charges or percentage-based pricing. Then consider whether other costs—such as account, inactivity, custody or foreign-exchange fees—apply to the service you are considering; check each broker’s current terms directly.
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ASX distinguishes full-service brokers, which typically charge more for advice and other services, from lower-cost non-advisory brokers that may suit investors confident in making their own decisions. Also check what transaction records and tax reporting information a provider supplies rather than assuming these features are the same across brokers. ASX: How to buy and sell shares.
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Who this tax explanation applies to
This overview concerns Australian individual investors holding ASX shares as investments. Tax treatment may differ for share traders, companies, trusts, superannuation funds, non-residents, employee shares, foreign shares and corporate actions. Frequent trading by itself does not establish whether someone is an investor or a trader; the ATO considers the facts of the activity. Check current ATO guidance and the tax rules for your circumstances and income year. The exchange on which a share is listed does not, by itself, determine an investor’s tax residency or tax treatment.
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