Who This Guide Is For
This guide is for Australian taxpayers who hold shares, ETFs, cryptocurrencies, investment properties, or other capital assets that have declined in value during FY2025–26. If you have unrealised capital losses in your portfolio, the weeks before June 30 are your last opportunity to trigger those losses and offset capital gains — a strategy known as tax-loss harvesting.
This applies to individual investors, SMSF trustees, and anyone who has triggered a capital gains tax (CGT) event this financial year.
Time-sensitive: You must sell the asset on or before June 30, 2026 for the CGT event to fall in FY2025–26. A sale on July 1 counts toward the next financial year.
What Is CGT Loss Harvesting?
Capital gains tax (CGT) applies when you dispose of a capital asset for more than its cost base. But the reverse is also true — if you sell an asset for less than you paid, you realise a capital loss.
A capital loss can be used to:
- Offset capital gains in the same financial year (must be done before offsetting other income)
- Carried forward indefinitely to offset future capital gains
Important ATO rule: You cannot offset a capital loss against ordinary income (salary, business profit, rental income). Capital losses only offset capital gains. (ATO guidelines)
How Tax-Loss Harvesting Works
Step 1: Calculate Your Net Capital Position
First, sum all capital gains and losses for FY2025–26:
| Position | Example |
|---|
| Capital gains realised | Sold shares for $20,000 profit |
|---|---|
| Less: Capital losses realised | Sold shares for $5,000 loss |
| Less: Unrealised losses to harvest | Paper loss of $12,000 on a stock |
| Net capital gain (before harvesting) | $20,000 − $5,000 = $15,000 |
Step 2: Sell Underwater Assets
In the example above, selling the stock with a $12,000 paper loss reduces the net capital gain:
$15,000 − $12,000 = $3,000 net capital gain
Step 3: Apply CGT Discount (if eligible)
If you held the asset for 12+ months, apply the 50% CGT discount to the net gain:
$3,000 × 50% = $1,500 added to assessable income
Savings: Without harvesting, the assessable gain would have been $15,000 × 50% = $7,500. Harvesting the loss reduced assessable income by $6,000. At a 37% marginal rate, that is $2,220 in tax saved.
What Assets Can You Harvest?
Shares and ETFs
The most common tax-loss harvesting candidates. Fraxed shares trading below your purchase price can be sold to realise a capital loss.
Cryptocurrency
The ATO treats crypto as a CGT asset (ATO guidelines). If your crypto holdings are underwater at EOFY, selling realises a capital loss. Note: The ATO's data-matching programs cover Australian crypto exchanges — ensure all disposals are reported.
Investment Properties
You can sell a property at a loss, but transaction costs (agents, legal, stamp duty on purchase) are added to the cost base — making the loss calculation more complex. The holding period affects the CGT discount.
Managed Funds
Units in managed funds or ETFs that have declined in value can be sold to trigger a loss. Note: distributions (dividends) are income, not capital — they are handled separately.
Watch Out: The Wash Sale Rule
Critical ATO warning: If you sell an asset to realise a loss and then immediately buy it back (or a substantially identical asset), the ATO may apply the anti-avoidance provisions (Part IVA). This is known as a "wash sale" and the loss may be denied.
Safe practice: Either:
- Wait a commercially meaningful period before repurchasing (no fixed rule, but 30+ days is generally acceptable)
- Buy a different asset in the same sector (e.g., sell VAS and buy A200 — different ETFs tracking similar indices)
- Permanently reallocate the capital
Common CGT Loss Harvesting Mistakes
| Mistake | Why It's Wrong | What to Do Instead |
|---|---|---|
| Triggering losses without gains to offset | Unnecessary transaction costs with no tax benefit | Only harvest if you have capital gains this year, or expect them next year |
| Wash sale — rebuying within days | ATO may deny the loss under anti-avoidance rules | Wait 30+ days or buy a different asset |
| Forgetting to include brokerage in cost base | Overstates loss by understating cost base | Add brokerage and fees to cost base calculation |
| Not tracking parcel-by-parcel | ATO requires parcel-level tracking for shares | Use sharesight.io or a spreadsheet |
| Harvesting assets held < 12 months first | If both gains and losses are short-term, no discount applies anyway — but prioritising short-term losses wastes the CGT discount on remaining long-term gains | Prioritise assets by tax impact, not holding period |
| Not considering the CGT discount interaction | Losses offset gains before the 50% discount, reducing the discount benefit | Calculate net gain first, then apply discount |
Step-by-Step CGT Loss Harvesting Before EOFY
Records to Keep
- Buy and sell contract notes (CHESS statements for ASX shares)
- Brokerage statements showing cost base and proceeds
- Crypto exchange transaction histories
- Property settlement statements and depreciation schedules
- Records of any corporate actions (mergers, demergers, share splits) that affect cost base
- Dividend/distribution statements (for managed funds)
Quick Checklist
- Listed all capital gains realised in FY2025–26
- Identified all assets currently trading below cost base
- Calculated the tax benefit of harvesting each loss
- Checked holding period for each asset-to-sell
- Confirmed no wash sale risk (different asset or 30+ day gap)
- Know the settlement cut-off: trade by June 28 for ASX (T+2)
- Trade by June 30, 11:59 PM AEST for crypto (instant settlement)
- Saved all contract notes and cost base records
a registered tax agent (see the directory) Still unsure whether you need professional help? See our comprehensive decision guide.
*Disclaimer: This is general information only and does not constitute financial or tax advice. CGT rules are complex and depend on your individual circumstances. Consult a registered tax agent or financial adviser before executing any tax-loss harvesting strategy.*