Using Capital Losses to Reduce Your CGT
Capital losses can offset capital gains, reducing your tax bill. If you sell assets at both a profit and a loss in the same year, the loss reduces the taxable gain—potentially to zero.
This calculator shows the tax outcome of each sale individually. In practice, when you lodge your tax return, your total capital losses are subtracted from your total capital gains before any tax is calculated.
Why this matters
If you have underperforming investments, selling them at a loss isn't just cutting your losses—it can save tax on your winning positions. This strategy, sometimes called "tax loss harvesting," is particularly useful before the end of the financial year.
The key rule: capital losses can only offset capital gains. They cannot reduce your regular income (salary, dividends, interest). Any unused losses carry forward indefinitely to future years.
What most people get wrong
Applying losses to the discounted gain. Losses are applied to the gross capital gain first, before the 50% discount is calculated. So a $10,000 loss offsets a $10,000 gain entirely—not just $5,000 of the discounted amount.
Thinking losses reduce other income. Capital losses only offset capital gains. If you have no gains this year, the loss carries forward—it doesn't reduce your salary or other income.
Wash sale confusion. If you sell at a loss and buy back the same or substantially similar asset within a short period, the ATO may deny the loss deduction. The rules target artificial arrangements, not genuine portfolio rebalancing.
Scenario A: Profitable sale (capital gain)
Scenario B: Loss-making sale (capital loss)
Applies to both scenarios
0 months after Scenario A
Scenario A
Profitable sale (capital gain)2025-26 Capital Gains Tax rates
Tax Comparison
Scenario B
Loss-making sale (capital loss)2025-26 Capital Gains Tax rates
Tax Comparison
This calculator provides estimates only and does not constitute financial advice. Actual amounts may vary based on individual circumstances. Consult a registered tax agent for personalised guidance.
How to use this comparison
- Review the pre-filled scenarios — we've set up realistic defaults for comparison
- Adjust the numbers — enter your actual purchase price, sale price, and dates
- Compare the results — see the tax difference highlighted at the top
- Share or bookmark — the URL updates as you change inputs
How Capital Gains Tax Works
When you sell an asset for more than you paid, the profit is a capital gain. In Australia, this gain is added to your taxable income and taxed at your marginal rate. The amount of tax you pay depends on your total income that year, how long you held the asset, and whether any exemptions apply.
Key factors affecting your CGT
- Holding period: Assets held for 12+ months qualify for the 50% CGT discount, halving your taxable gain
- Your income: Higher income means a higher marginal tax rate on your capital gains
- Asset type: Your main residence is generally CGT-free; investment properties and shares are not
- Cost base: Includes purchase price plus costs like stamp duty, legal fees, and improvements
Use the calculator above to model your specific situation. Adjust the inputs to see how different scenarios affect your tax outcome.