The window to use tax-loss harvesting on your 2025–26 trading positions is closing fast. Every disposal you make before 30 June 2026 either feeds into this year’s tax return or it doesn’t — there’s no in-between. For Australian traders sitting on unrealised losses, the next few weeks are when decisions get made. This guide walks through what tax-loss harvesting actually is, how the ATO views it, the wash sale trap to avoid, and a practical EOFY calendar you can work backwards from.
What tax-loss harvesting actually means
Tax-loss harvesting is the deliberate sale of a losing investment before the end of the financial year, to crystallise a capital loss. That loss then offsets capital gains you’ve already made in the same year, lowering your taxable position. If your losses for the year exceed your gains, the excess carries forward indefinitely to use against future gains.
It’s not a loophole. It’s the standard mechanism the ATO uses to net gains and losses across an investor’s portfolio for the year. The catch is the timing — and the rules around what you do next with that capital.
Why this year matters more than usual
Three reasons 2026 deserves extra attention.
First, the volatility. Crypto and ASX growth stocks have given Australian traders plenty of unrealised losses to choose from this year. Bitcoin’s range, altcoin drawdowns, and the rotation out of tech mean many portfolios are sitting on positions worth less than the buy price.
Second, the 50% CGT discount is being scrapped from July 2027. Under the 2026–27 federal budget, long-term gains on assets bought after 1 July 2027 will be discounted by 30% based on inflation rather than the current flat 50%. Crystallising losses now becomes a useful counter-balance to gains you might bring forward before the discount changes.
Third, ATO data-matching is sharper than ever. The ATO now matches reporting from every Australian-licensed exchange and broker. If you have unreported activity, it’s already on file. Loss-harvesting works to your advantage only when your reporting is complete.
The wash sale trap
This is where many Australian traders trip themselves up. A wash sale is when you sell an asset to claim the loss, then buy back the same or substantially identical asset shortly afterwards. The ATO’s Taxpayer Alert TA 2008/7 is explicit: where the dominant purpose of the sale is to generate a tax benefit, the loss can be disallowed under Part IVA — Australia’s general anti-avoidance rule.
There is no fixed “30 day rule” in Australian tax law like the United States has. What matters is intent and timing combined. Sell BTC on 28 June and buy back on 2 July with identical sizing? That’s a wash sale risk. Sell BTC on 28 June, reassess your portfolio, and buy back a different exposure (or wait several weeks before re-establishing the position)? That’s defensible.
The safest practical rule: if the sale is purely to harvest a loss with no other economic substance, expect the ATO to challenge it. If the sale reflects a genuine change in your view of the asset, you’re on much firmer ground.
What offsets what
Capital losses can only offset capital gains. They can’t offset your salary, your business income, or staking rewards (which are ordinary income). This catches a lot of crypto traders out.
Here’s the order of operations the ATO requires:
- Apply current year capital losses against current year capital gains (before any discount).
- Apply carried-forward capital losses from prior years.
- Apply the 50% CGT discount to remaining gains that qualify (held more than 12 months as an individual investor).
- The result is your net capital gain for the year.
Critically, you apply losses against gross gains before the 50% discount — not after. This means each dollar of loss is worth a full dollar against a short-term gain but only fifty cents against a discounted long-term gain. The maths matters when you’re deciding which gains to realise alongside your losses.
Worked example
Take a trader with the following 2025–26 position:
- ASX share gain (held 18 months): $20,000
- BTC gain (held 8 months): $12,000
- Altcoin unrealised loss (held 6 months): $15,000
Without harvesting: total gains $32,000. Apply 50% discount on the ASX gain only ($10,000 discount). Net capital gain $22,000.
With harvesting the altcoin loss before 30 June: gross gains $32,000, less $15,000 loss equals $17,000. The ATO requires applying the loss against the non-discounted gain first (the BTC short-term gain), bringing it to negative $3,000 which then reduces the ASX gain to $17,000. Apply the 50% discount: $8,500. Net capital gain $8,500.
Tax saving on a 37% marginal rate: roughly $5,000. The mechanics differ for every trader, but the principle is universal — losses are most valuable when matched against short-term gains.
An EOFY calendar to work backwards from
Week of 25 May — Audit
Pull a full transaction history from every exchange and broker. Calculate your year-to-date realised gains and losses. Identify unrealised positions, both winners and losers.
Week of 8 June — Plan
Decide which loss positions you genuinely want to exit, and what the replacement exposure (if any) will look like. Document your reasoning. If you want to maintain market exposure, identify a non-identical alternative.
Week of 15 June — Execute
Realise the losses you’ve planned. Pacing them across the week reduces market-impact and gives you time to handle anything unexpected. Don’t leave it to 29 June — exchange outages and timezone confusion at the EOFY rollover have caught traders out before.
Week of 22 June — Buffer
Final cleanup. Anything that didn’t settle from the previous week, any positions you reconsidered, and a final pass through your records.
30 June — End of financial year
EOFY rolls over at midnight AEST. After this point, any disposal counts toward the 2026–27 financial year instead.
When not to harvest
Tax-loss harvesting only makes sense if you have gains to offset or carried-forward losses to manage. If your year is already a net loss and you’re going to carry it forward anyway, realising more losses just adds to the carry-forward bucket — it doesn’t help your current return.
It also rarely makes sense if you genuinely believe the losing asset will recover. The few percent you save in tax is small compared to what you might give up by exiting at the bottom. Tax planning should follow the investment thesis, not lead it.
The bottom line
Tax-loss harvesting is a legitimate, well-understood tool in the Australian tax system. Used carefully, it can reduce a current year tax bill significantly. Used carelessly — particularly with quick repurchases of the same asset — it invites the ATO to disallow the loss under the wash sale rules.
The investors who handle it well do three things: they plan before EOFY rather than scrambling at the end of June, they document their reasoning in case the ATO ever asks, and they avoid quick re-entries into identical positions. None of that is complicated. It just requires acting now, not in the final days of June.
For more on the year’s other tax changes — particularly the scrapping of the 50% CGT discount — see our companion piece. To learn how Impulse Cashholm’s AI engine helps you manage positions with cleaner records, visit our How It Works page or the FAQ.
This article is general in nature and does not constitute tax, legal, or financial advice. Tax laws and ATO interpretations change. Speak to a registered tax agent or qualified accountant for advice tailored to your situation before acting on any tax strategy.