Tax loss harvesting in Australia

Tax loss harvesting is straightforward in concept: sell investments sitting at a loss to offset capital gains you have realised elsewhere. In Australia, the rules differ significantly from the US, and the ATO's approach to wash sales is less mechanical but arguably more aggressive.

How it works

You have realised capital gains during the 2025-26 financial year. You also hold shares currently worth less than what you paid. Sell the losers before 30 June to crystallise losses that offset your gains.

Key rules under Australian tax law:

• Losses must offset gains before the 50% CGT discount is applied
• Losses cannot be deducted against salary or other income
• Unused losses carry forward indefinitely
• No limit on the amount of losses you can apply in a given year

Worked example

BHP: Bought for $42,000 (March 2024), sold for $54,000 (October 2025). Held over 12 months. Gain: $12,000.

ZIP: Bought for $8,000 (February 2025), currently worth $3,500. Unrealised loss: $4,500.

Without harvesting: $12,000 gain, 50% discount = $6,000 assessable. At 32% effective rate: $1,920 tax.

If you sell ZIP before 30 June: $12,000 - $4,500 = $7,500 net gain. 50% discount = $3,750 assessable. At 32%: $1,200 tax. You save $720.

Losses reduce the gain before the discount, so each dollar of loss is more powerful than it looks. For the full CGT calculation process, see how to calculate capital gains on shares in Australia.

Australia's wash sale rules

This is where Australia and the US diverge sharply.

The US has a specific 30-day wash sale rule. Sell at a loss and buy back the same security within 30 days, and the loss is disallowed. Mechanical and automatic. For detail on the US approach, see our US tax-loss harvesting guide.

Australia has no specific wash sale rule with a defined time period. Instead, the ATO relies on Part IVA of the Income Tax Assessment Act 1936, the general anti-avoidance provision. If the dominant purpose of a scheme was to obtain a tax benefit, the ATO can deny the loss.

There is no "safe" number of days to wait. The ATO looks at the overall picture: did you sell and immediately repurchase? Was there any genuine change in your economic position? Was the timing suspiciously close to 30 June with an instant buyback?

For a deeper dive, see our guide on wash sale rules in Australia.

How to harvest safely

Sell and do not repurchase. The cleanest approach. If you genuinely want to exit, no anti-avoidance concerns.

Sell and buy something different. Want to keep sector exposure? Sell one bank stock and buy another, or sell a specific miner and buy a diversified resources ETF.

Sell and wait. If you do plan to repurchase the same shares, a longer gap and a documented commercial rationale reduce Part IVA risk.

Document your reasoning. Keep notes on why you sold. Portfolio rebalancing, deteriorating outlook, cash needs. This supports genuine commercial purpose.

Mistakes to avoid

Harvesting losses you cannot use. No gains this year and none expected soon? The losses carry forward, but you lock in the loss now and give up any price recovery.

Ignoring transaction costs. Brokerage on the sell and the repurchase can eat into or exceed the tax benefit on small losses.

Selling Monday, buying back Tuesday. The ATO has specifically flagged this behaviour. You are at risk under Part IVA.

Forgetting the discount interaction. Model the full calculation before deciding. Our capital gains tax calculator can help.

TrackMyShares tax loss harvesting tool

TrackMyShares includes a dedicated tax-loss harvesting tool that scans your portfolio and surfaces opportunities automatically. It shows your realised gains (split by short-term and long-term), holdings with unrealised losses, estimated tax savings at your marginal rate, and recommended actions for each holding.

Prices update throughout the day, so you can act on opportunities as they arise. If harvesting changes your portfolio allocation, the rebalancing tool helps you plan reinvestment.

Start tracking your portfolio with TrackMyShares

This is general information, not personal tax or financial advice.