A common misconception is that capital gains tax is a separate tax with its own specific rate. In reality, capital gains are added to a person's income for the tax year and taxed at their marginal tax rate. Follow these steps to calculate how much of your capital gains might be subject to tax in any given financial year:Work out your total capital gains for the year Deduct any capital lossesIncluding any capital losses from previous years (more on that below) Deduct any CGT discounts or concessions you're entitled to The resulting sum is your net capital gain subject to taxCapital gains tax: An exampleLet's illustrate how capital gains tax might be applied in the case of a property sale:Peter bought his first investment property for $420,000 right before a major market boom. Capital gains tax discountsUnfortunately for Peter, he couldn't access any common capital gains discounts. Offsetting capital gains tax with past lossesIf you're an avid investor who has made some losses in the past, you might be able to use those previous losses to offset your capital gains in the eyes of the Australian Taxation Office (ATO).