Selling Shares Before 30 June: Tax-Loss Harvesting in Australia
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Primary tax-year context: Current Australian tax settings
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General information only. This is not tax or financial advice. Consult a registered tax agent for advice specific to your situation.
With 30 June approaching, Australian investors who hold shares, ETFs, crypto, or managed funds in taxable accounts have a narrowing window to use tax-loss harvesting — selling assets at a loss to offset realised capital gains and reduce the current year’s tax bill.
Done correctly, tax-loss harvesting is a legitimate, widely used tax-planning strategy. Done carelessly, it can attract ATO scrutiny under the general anti-avoidance rule, or worse, result in an audit flag if the ATO views the transaction as a wash sale. This article explains how to do it properly in the Australian context.
The Basic Arithmetic
When you sell an asset for more than its cost base, you realise a capital gain. When you sell for less, you realise a capital loss.
Capital losses can only be offset against capital gains — not against salary, interest, rental income, or any other type of income. If your capital losses exceed your capital gains in a given year, the net loss is not lost: it carries forward indefinitely to offset future capital gains.
Example: During 2025-26 you:
- Sold BHP shares in September for a $15,000 capital gain
- Currently hold CBA shares showing a $9,000 unrealised loss
If you sell the CBA shares before 30 June, the $9,000 loss offsets $9,000 of the BHP gain. Your net capital gain for the year = $15,000 − $9,000 = $6,000. If you are eligible for the 50% CGT discount (held both parcels for 12+ months), the net gain is further reduced to $3,000, which is added to your assessable income and taxed at your marginal rate.
If you do not sell the CBA shares, your net capital gain is $15,000 (then reduced by the CGT discount if eligible). The $9,000 paper loss sits unrealised in your portfolio and does nothing for your 2025-26 tax.
The ATO’s View on Wash Sales
The key risk is a wash sale: selling an asset at a loss to crystallise a tax benefit and then immediately repurchasing the same (or substantially identical) asset.
The ATO does not have a specific statutory wash sale rule like the IRS does in the US. Instead, the ATO relies on:
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The general anti-avoidance rule (Part IVA of the ITAA 1936): If the sole or dominant purpose of the sale is to obtain a tax benefit, the ATO can cancel that benefit. A sale-and-immediate-repurchase transaction where the only changed fact is the cost base reset would almost certainly fall under Part IVA.
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Taxpayer Alert TA 2008/7: The ATO has specifically flagged wash sales of shares and units in managed funds as an area of active compliance focus. This alert describes arrangements where taxpayers sell and repurchase listed securities through different brokers, through different entities (self vs SMSF vs company), or at prices rigged to match.
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ATO data-matching: The ATO receives data from the ASX, share registries (Computershare, Link Market Services), and brokers. They can match sell and buy transactions across accounts and brokers. A sale in one broker account and purchase of the same security in another account on the same day is trivially detectable.
What Distinguishes Legitimate Tax-Loss Harvesting from a Wash Sale
The ATO looks at the substance and timing of the transaction:
| Factor | Legitimate Harvesting | Wash Sale (Problematic) |
|---|---|---|
| Time between sale and repurchase | Typically 30+ days, or no repurchase at all | Same day, next day, or within a few days |
| Reason for sale | Portfolio rebalancing, exiting a position you no longer want, changing asset allocation | Sole reason is the tax loss |
| Replacement asset | Different security (different company, different ETF tracking different index) | Same security or substantially identical ETF |
| Economic exposure | You genuinely exited the position and bore market risk during the gap period | You maintained continuous economic exposure through a derivative, CFD, or spouse’s account |
Practical guidance from tax practitioners: Waiting at least 30 days before repurchasing the same security is the most common safe-harbour approach. Alternatively, buying a different security in the same sector (e.g., selling CBA and buying NAB, or selling VAS and buying IOZ — different ETF issuers tracking different but correlated indices) strengthens the argument that the transaction was a genuine portfolio decision.
The CGT Discount Interaction
The 50% CGT discount applies when you have held an asset for at least 12 months (excluding the day of acquisition and the day of disposal). This is important for tax-loss harvesting because:
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You should generally harvest losses before gains — if you have both unrealised losses and unrealised gains in your portfolio, consider crystallising the losses first. The losses offset gains dollar-for-dollar before the 50% discount is applied, so $1 of loss offsets $1 of undiscounted gain.
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Don’t sell an asset you have held for 11 months just for a loss. If you wait one more month, any future gain on that asset (if you repurchase and it recovers) will be eligible for the 50% discount. If you bought BHP shares in July 2025 and they are down in June 2026, you have held them for ~11 months. Selling now crystallises a short-term loss; but if you had waited until August 2026 and they recovered, the gain would be eligible for the discount. The trade-off between the immediate tax benefit and the long-term discount eligibility needs to be weighed.
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The discount applies after netting gains and losses. If you have a $20,000 gain (held 12+ months) and harvest a $5,000 loss, the net gain is $15,000, and the 50% discount applies to that $15,000 — producing a $7,500 assessable gain. Not $20,000 × 50% − $5,000, which would give $5,000. The order of operations matters and is set in legislation: gains are netted against losses first, then the discount is applied to the remaining net gain.
Which Assets Can Be Harvested
Tax-loss harvesting works on assets where the CGT regime applies:
- ASX-listed shares: The most common harvesting target. Liquid, easy to value, easy to sell and rebuy.
- ETFs and managed funds: Same principle. Be aware that if you hold the same ETF through different brokers, the ATO can still match the transactions.
- Cryptocurrency: CGT applies to crypto disposals. The same wash sale logic applies — if you sell Bitcoin at a loss and immediately buy it back on the same exchange, the ATO could apply Part IVA.
- Investment property: In theory a property can be harvested, but the transaction costs (agent fees, stamp duty on repurchase) almost always outweigh the tax benefit. Properties are not practical harvesting candidates.
- Collectibles and personal-use assets: Capital losses on collectibles (art, jewellery, coins) can only offset capital gains on other collectibles — not general capital gains. Personal-use assets acquired for $10,000 or less are exempt from CGT altogether, and capital losses on personal-use assets are disregarded. Do not attempt to harvest losses on these.
Executing the Trade: Practical Steps
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Quantify your gains and losses. Review your brokerage statements for the period 1 July 2025 to date. List every sale — the date, proceeds, and cost base. Calculate the gain or loss for each. Then list your current holdings and their unrealised gains or losses.
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Determine your net position. If you are sitting on a net realised gain, calculate the tax at your marginal rate. This gives you a dollar figure for how much harvesting could save.
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Identify harvesting candidates. Look for holdings with the largest unrealised losses relative to their portfolio weight. Consider whether you want to permanently exit the position (sell and not rebuy) or temporarily exit (sell and rebuy a similar but not identical security after 30+ days).
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Execute the sale before 30 June. For ASX-listed securities, trades settle T+2. The CGT event date is the contract date (the date you placed the order), not the settlement date. A trade executed on 29 June 2026 with settlement on 1 July 2026 is a 2025-26 CGT event. A trade executed on 1 July 2026 is a 2026-27 event — too late.
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Keep records. Document the reasons for the sale (rebalancing, sector rotation, risk management — not just “tax loss”). If you repurchase a similar security, note how it differs from the one you sold.
What Not to Do
- Do not sell in your personal name and rebuy in your SMSF. The ATO views related-party transactions as high-risk wash sale indicators.
- Do not use CFDs or options to maintain synthetic exposure to the sold security during the gap period. If the ATO can demonstrate continuous economic exposure combined with a tax-motivated sale, Part IVA is in play.
- Do not sell and have your spouse buy the same security. Affiliated-person transactions are explicitly covered by TA 2008/7.
- Do not forget about the 45-day rule for franking credits. If you are holding shares for franking credits, selling and rebuying may reset the 45-day holding period required to claim franking credits on dividends. This is a separate rule from the CGT harvesting rules but equally important.
Carried-Forward Losses from Prior Years
If you have unapplied net capital losses from prior years, they automatically offset current-year capital gains — you do not need to do anything. However, if you also have current-year unrealised losses, harvesting them adds to the loss pool but does not create an immediate additional benefit if you already have sufficient prior-year losses to offset all current-year gains. The prior-year losses are applied first, then current-year losses.
Review your last Notice of Assessment or myGov ATO account to check whether you have carried-forward capital losses before executing a harvesting strategy.