Tax loss harvesting in Australia lets you sell ASX-listed securities below their cost base and apply the resulting capital losses against capital gains, not salary or other ordinary income. Unused losses carry forward indefinitely. The process requires accurate parcel-level records, checking the Part IVA position, modelling the outcome, and documenting your investment rationale.
This guide takes you through the full ASX portfolio process: identifying candidates, checking the Part IVA position, choosing which parcels to sell, forecasting the tax outcome before you trade, and producing records your accountant can actually use.
What is tax-loss harvesting in Australia?
When you sell an ASX-listed security for less than its cost base, you realise a capital loss. That loss is applied against capital gains you have realised in the same financial year. If your losses exceed your gains, the unused balance is carried forward indefinitely and applied against future years’ gains.
Two Australian specifics steer every decision that follows:
- Losses offset gains only. Unlike the US, you cannot deduct a net capital loss against ordinary income. A harvested loss is worth nothing in the current year unless you have gains to absorb it — though it never expires.
- The 50% CGT discount applies to gains, not losses. If the mechanics of the discount are new to you, start with how capital gains tax works on shares in Australia. For individuals, a gain on an asset held longer than 12 months is discounted by 50%. Losses are applied against the gross gain before the discount, which means a dollar of loss shelters more tax when applied to an undiscounted (held under 12 months) gain than to a discounted one.
That second point is easy to get backwards. Applying a loss to a short-held gain removes a fully assessable dollar; applying it to a long-held gain removes a dollar that would only have been half assessable. The order in which losses are applied to gains is therefore worth modelling rather than guessing.
The practical difficulty is timing. Rather than discovering at 30 June that you had excess losses or unsheltered gains, Crowdfolio forecasts the CGT outcome of a proposed sale before you place it, which puts the tax cost inside the trading decision instead of after it.
Before you start: get your portfolio data right
Every forecast below is only as good as the transaction history behind it. Three things to check first.
Import your holdings
Crowdfolio accepts CSV exports from the major Australian brokers — SelfWealth, Stake and CMC Markets, with a generic template for other brokers. Export your transaction history rather than just a holdings snapshot: you need purchase dates and prices per parcel, not only current quantities. If your broker is not on the list, most others export some form of transaction history, and holdings can also be entered manually. No broker login is required at any point.
Verify your cost base
Cost base is not simply the share price you paid. It includes brokerage on acquisition, and it is adjusted by corporate actions — dividend reinvestment plans, rights issues, share splits, returns of capital. A portfolio built up through a DRP over several years will have many small parcels at different cost bases, and an unadjusted cost base will misstate every loss figure you are about to rely on. Reconcile against your broker statements before harvesting anything.
Confirm the financial year
The Australian financial year runs 1 July to 30 June. CGT calculations are organised by that year, and a loss realised on 1 July belongs to a different year from one realised on 29 June. If you are harvesting in May or June, you are also making a decision about which year the loss lands in.
How does tax-loss harvesting work with ASX shares?
Start with the portfolio view. It shows each holding’s current market value against its cost base, plus the unrealised gain or loss in dollars and as a percentage.
Filter for positions trading below cost base. Then apply two filters of your own:
- Size. Harvesting a $50 loss costs you two lots of brokerage and is unlikely to be worth the effort. A meaningful threshold — commonly a few hundred dollars and up — keeps the exercise economic.
- Your gains position. A loss is only immediately useful if you have realised gains to apply it against. If you have none this year, harvesting still banks a carried-forward loss, but the benefit is deferred, and the transaction costs and the market risk of being out of the position both bear on that trade-off.
Also note how long you have held each candidate, because it changes what the loss is worth against different gains, as described above.
Is there a wash-sale rule in Australia?
This is where DIY investors most often go wrong, usually by importing a US rule that does not exist here.
Australia has no 30-day rule
The United States has a codified wash-sale rule with a bright-line 61-day window. Australia does not. There is no statutory holding-off period, and no safe harbour you can satisfy by waiting a set number of days. Anyone who tells you that waiting 30 days makes a repurchase safe is describing US law.
What Australia has instead is broader. The ATO’s position, set out in Taxation Ruling TR 2008/1 and flagged in Taxpayer Alert TA 2008/7, is that a “wash sale” — a disposal that generates a loss without any substantial change in your economic exposure to the asset — can be attacked under the Part IVA general anti-avoidance provisions. The ATO has publicly warned that it uses data matching to identify these arrangements, and penalties can apply where Part IVA is invoked.
The test is dominant purpose, not elapsed time
Part IVA applies where the dominant purpose of an arrangement is to obtain a tax benefit. Selling a holding and buying it straight back leaves your economic position unchanged, which makes the tax benefit look like the only reason you traded — regardless of how many days you waited.
Conversely, if you have a genuine investment reason for the sale — reducing a concentrated position, exiting a holding whose thesis has broken, rebalancing back to target weights — then the loss is a consequence of that decision rather than its purpose. Write the reason down at the time you trade. Contemporaneous notes are far more persuasive than a reconstruction two years later.
Replacement securities
Where market exposure is being maintained, the question is whether the replacement holding is genuinely different or merely functionally identical. Selling one broad Australian equity ETF and buying another that tracks a different index maintains your asset allocation while materially changing what you own. Selling an ETF and rebuying the same ETF — or a different issuer’s fund tracking the identical index — does not change your economic exposure in any meaningful way, which is exactly the fact pattern TR 2008/1 describes.
Crowdfolio flags repurchases of the same security so you can see the pattern before you create it. Treat the flag as a prompt to document your reasoning, not as a compliance clearance — the dominant-purpose question is a judgement about your circumstances, and borderline cases are worth putting to your accountant.
Choose which parcels to sell
If you have bought the same security more than once, the parcels you nominate for sale determine the gain or loss you realise. This is one of the largest levers available to you, and it is frequently left unused.
What the ATO actually allows
Shares you can individually distinguish, by share number or by distinctive rights attached to them, are identified as a matter of fact: their acquisition date and cost base are not a choice. A choice only arises where the shares form part of a holding of identical shares, acquired over time, that cannot be distinguished. For that case, CGT Determination TD 33 puts the decision on you: you decide which shares were disposed of, and keep records adequate to support that decision. The Commissioner has accepted first-in-first-out as a reasonable basis of identification there, and will also accept your own selection. FIFO is an accepted basis in that situation, not an automatic rule.
It is worth being precise about this, because portfolio tools often present a menu of “methods” — FIFO, LIFO, highest-cost-first — as though each were separately sanctioned. That is not quite how TD 33 works. Where identical shares cannot be distinguished, first-in-first-out and your own selection are both accepted, so neither is a fallback from the other. Average cost is the one method carrying a stated condition: TD 33 allows it only for shares in the same company, acquired on the same day, conferring identical rights and imposing identical obligations. “Highest cost first” and similar labels are simply selection heuristics applied on top of specific identification — useful shorthand for which parcel to nominate, but they only hold up if your records actually identify the parcels. LIFO in particular is not an ATO-sanctioned method in its own right; it is only ever specific identification that happens to select the most recent parcel.
The practical consequence: keep parcel-level records, and make the nomination deliberately and contemporaneously.
Modelling the choice
The parcels with the highest cost base produce the largest loss, which is why they are usually the ones modelled first when harvesting. Crowdfolio shows the realised gain or loss for each candidate parcel before you commit, so you can see the difference between nominating your oldest parcel and your most expensive one. On a position accumulated over several years, that difference is routinely material.
How do you claim a capital loss on your tax return?
Enter the proposed sale — security, quantity, and either the current price or a hypothetical one — and review the projection before placing anything with your broker. The projection shows:
- The capital gain or loss the sale realises, on your nominated parcels
- How that loss applies against gains already realised this financial year
- Your net capital gain or loss for the year after the trade
- The resulting change in estimated tax
This is the decision point. The projection shows what the disposal does to your tax; whether that saving justifies the brokerage, and whether there is an investment reason for selling at all, are the questions it leaves with you. Testing more than one sale price is also worthwhile, since it shows how sensitive the outcome is to where the market actually fills you.
Execute the sale and the replacement
Place the sell order with your broker for the quantity you modelled. If your broker supports trade notes, record that this is a loss-harvesting disposal and which parcel you are nominating — this is the contemporaneous record that supports your parcel identification under TD 33.
ASX trades settle on a T+2 basis. If you are buying a replacement security, plan for that gap: between settlement and repurchase your portfolio is underweight that part of the market, and an adverse move in those two days can cost more than the tax you saved. Coordinate the two legs rather than leaving the replacement for whenever you next log in.
Give both legs a paper trail: dates, ASX codes, quantities, prices, brokerage, and the reason for the trade.
Update your records and plan the next harvest
Re-import your updated transaction history, or enter the trades manually. Crowdfolio will recognise the disposal and recalculate your position; check that the cost bases of the remaining parcels look right after the import, particularly if you sold part of a holding.
Return to the forecast and confirm the realised loss is now reflected in your year-to-date CGT position, with a correspondingly lower estimated liability.
Then set a cadence. Harvesting is not a once-a-year activity done in the last week of June — opportunities appear whenever markets fall, and a monthly or quarterly review catches them while they exist. Reviewing at the same time as a scheduled rebalance keeps the two decisions together: the rebalance supplies the investment reason for the trade, and the harvest is the tax consequence of a decision you were making anyway. That ordering is also the more defensible one under Part IVA.
Where you know a large gain is coming — selling a long-held position, or a takeover completing — you can model the combination in advance and decide whether to bring harvests forward to meet it.
Prepare accountant-ready reports
After 30 June, generate your capital gains and losses summary for the year. It should cover every disposal, with sale dates and prices, the cost bases and acquisition dates of the parcels sold, the gain or loss on each, the net position for the year, and the split between discounted and undiscounted gains.
Export it in a format your accountant can work from directly rather than rekeying. Alongside it, provide:
- Your investment rationale for each harvest, and any replacement securities used
- Any disposals where the Part IVA question is arguable
- Your parcel nominations, so the cost base treatment can be verified
None of this replaces advice from your accountant or tax agent, but it does mean they are reviewing your reasoning rather than reconstructing it.
Common mistakes
- Harvesting with no gains to offset. The loss carries forward, so it is not wasted, but the benefit is deferred while the brokerage is paid today.
- Treating 30 days as a safe harbour. It is a US rule. Australia tests dominant purpose, and a repurchase after 31 days with no investment reason is no safer than one after five.
- Selling without deciding on the replacement. If you harvest a loss and leave the proceeds in cash indefinitely, you have changed your asset allocation as a side effect of a tax decision.
- Harvesting trivial losses. Two lots of brokerage against a small loss and a marginal tax rate frequently nets out to nothing.
- Not recording parcel nominations. Without records to support your selection, first-in-first-out is the basis that remains — which may be the worst available outcome.
- Stale cost bases. Unadjusted DRP and corporate action history quietly misstates every loss figure in the portfolio.
Troubleshooting
The CSV import fails or maps incorrectly. Check the export includes ASX codes, quantities, trade dates and prices. Column names and date formats vary between brokers, so confirm the mapping on a small sample before importing a full history.
The forecast does not match your broker’s figures. The usual cause is a cost base difference from an unrecorded corporate action, or brokerage being included on one side and not the other. Reconcile parcel by parcel against your broker statements.
You are unsure whether a replacement is too similar. The question is whether your economic exposure has substantially changed. Two ETFs tracking the same index are hard to defend; funds tracking different indices with different constituents are a different proposition. If it is genuinely borderline, ask your accountant rather than guessing.
Record-keeping
The ATO can ask you to substantiate any CGT position, and the records need to exist at the time, not be assembled afterwards. Retain broker statements for all acquisitions and disposals, your CGT calculations, your parcel nominations, and your notes on investment rationale. Keep them for at least five years after the relevant return — longer where a loss is carried forward, because you will need the original cost base evidence in the year the loss is finally used.
Where harvesting fits in a broader tax-aware strategy
Harvesting is one tool among several, and it works best when it is not the only one. As Vanguard’s research notes — written for the United States, where a codified wash-sale rule applies, so read the mechanics with that in mind — the value depends heavily on individual circumstances — your gains position, your marginal rate, your turnover and your horizon — which is why generic estimates of the benefit are of limited use.
Complementary considerations include holding assets past the 12-month mark to access the 50% discount where the investment case supports waiting, and using concessional superannuation contributions to manage your overall taxable income. The ATO’s guidance on when CGT applies to shares and units is the primary source for the underlying rules.
The common thread is visibility. Once the tax consequence of a disposal is something you can see before you place the order, harvesting stops being a June scramble and becomes an ordinary part of managing the portfolio.
Getting started
Import your transaction history, check your cost bases, and look at what is currently below cost base. Model one or two disposals — including which parcels you would nominate — and see what the forecast says. Where the numbers and the investment rationale both support a disposal, the trade, any replacement holding, and the reasons for the decision are worth recording at the time.
Tax-loss harvesting in Australia is not complicated once the Part IVA position and the parcel-identification rules are clear. It is mostly a matter of doing it deliberately, with records, throughout the year rather than at the end of it.
This article is general information about Australian tax rules and does not take your circumstances into account. It is not tax or financial advice. Speak to a registered tax agent about your own position.