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Tax-Loss Harvesting Calculator
Tax-Loss Harvesting Calculator
Australia has no US-style wash-sale rule, but Part IVA anti-avoidance applies where a scheme's dominant purpose is a tax benefit — selling and instantly repurchasing the same asset can be denied. Repurchasing also resets the 12-month discount clock and your cost base, changing future outcomes.
CGT Saved This Financial Year
$2,560
Harvesting Analysis
Harvesting $8,000 of realised losses against this year's gains cuts CGT by $2,560 at your 32% effective marginal rate — about 32.0 cents per dollar of loss.
*Uses ATO Stage-3 brackets plus the 2% Medicare Levy and assumes all losses are applied against current-year gains, with leftovers carried forward indefinitely. Part IVA anti-avoidance can deny contrived sell-and-rebuy schemes. Educational only, not financial or tax advice.
Turning Paper Losses Into Tax Dollars
Tax-loss harvesting means deliberately selling investments sitting below their purchase price to convert an unrealised paper loss into a realised one the ATO will recognise — then using that loss to reduce capital gains tax elsewhere in your portfolio. The loss has no value while it stays on paper; crystallised at the right time, it directly cancels taxable gains this financial year or banks forward to cancel them in future ones. For Australian investors June is the natural season: portfolio reviews before 30 June let you harvest losers against winners in the same tax year. Australia's system shapes how harvesting works here. There is no short-versus-long rate split like the US; instead, gains on assets held over twelve months receive the 50% CGT discount while newer gains are taxed in full at your marginal rate. Capital losses never get discounted and can be applied against either kind of gain — which makes each harvested dollar worth more when it cancels a full-rate recent gain than a half-rate discounted one. Net losses carry forward indefinitely until gains absorb them. This calculator prices the whole decision: it applies ATO marginal rates including Medicare to your actual mix of discounted and undiscounted gains, shows exactly what realising your available losses saves, compares which gains to offset first, and tracks any loss carried forward.
Marginal Rates, Half-Rate Gains and Loss Ordering
Your effective marginal rate is the Stage-3 bracket rate plus the 2% Medicare Levy — for example, income between $45,000 and $135,000 pays 32% on every undiscounted capital gain dollar. Undiscounted gains owe that full rate; discounted long-term gains owe half of it, because only half the gain enters your assessable income. Without harvesting, this year's CGT is simply the sum of both amounts. With harvesting, realised losses are subtracted from gains before tax: each dollar of loss applied against an undiscounted gain saves your full effective marginal rate, while a dollar applied against a discounted gain saves roughly half as much. That asymmetry drives the ordering choice. The ATO does not mandate which gains a loss reduces first — you may choose the sequence that minimises tax, so the default strategy is to wipe out fully-taxed recent gains before touching discounted ones. The calculator computes both orders and flags when the alternative saves more. Whatever remains after absorbing this year's gains becomes a carried-forward capital loss, deductible against future gains with no expiry date. Two mechanical warnings matter: repurchasing a sold asset resets its twelve-month discount clock from the new purchase date, and moving money out of equities even briefly leaves you exposed to missing a rebound — the classic harvesting trade-off between certain tax savings and uncertain market timing.
Expert Insights
Harvest Against Full-Rate Gains First
A harvested dollar is not fungible across gain types. Cancelling a $10,000 gain from shares held eight months saves about $3,200 for a middle-bracket earner; cancelling $10,000 of twelve-month-old gain saves barely half that, because the discount already halved its taxability. Sequence your disposals accordingly: apply losses to sub-twelve-month parcels first, then to discounted gains, and only bank the remainder forward. The calculator's order toggle exists because this single choice routinely swings the saving by hundreds or thousands of dollars.
Respect Part IVA Without Fearing It
Australia never wrote a bright-line wash-sale rule, but the general anti-avoidance regime catches arrangements whose dominant purpose is securing a tax benefit. Selling a parcel and buying it back days later invites scrutiny; selling a genuinely underperforming holding and redeploying into a different security, index fund or sector ETF is ordinary investing. Practical guardrails most advisers use: hold the proceeds in something meaningfully different, keep turnaround periods sensible, document the investment rationale, and avoid end-of-June round trips timed purely to the calendar.
A Carried-Forward Loss Is a Real Asset
Harvesting is not only for years you owe CGT. Realising losses in a year with no gains creates a permanent, inflation-proof credit that offsets whenever future gains arrive — useful ahead of planned sales, a property settlement, or expected managed-fund distributions that surprise people with taxable gains. Many long-term investors maintain a standing loss bank precisely so a future rebalance never triggers an unexpected tax bill. Track the balance every year; it expires only when used.
Actionable Tips
- 1
Run the Harvest Review Every June
Put a recurring calendar entry in early June: list unrealised gains across every parcel and account, list underwater holdings worth selling, then price the match-up through this calculator before 30 June. Ten minutes of planning converts what would be next year's vague regret into a specific instruction list for your broker. Waiting until the last week risks settlement timing mistakes — ASX trades settle T+2, and disposal dates follow trade date, but give yourself room anyway.
- 2
Check Parcel-Level Cost Bases Before Selling
The same stock bought at different times produces different outcomes per parcel: one lot might sit at a loss while another shows a large discounted gain. Brokers default to FIFO parcel matching unless you specify, which can accidentally realise a big gain instead of the intended small one. Always nominate the exact parcel — the one with the highest cost base or shortest holding — rather than accepting the default method.
- 3
Mind the Discount Clock When You Repurchase
If you sell a twelve-month-old winner's offsetting loser and immediately rebuy the same company, the new parcel starts its twelve-month discount wait again from zero. Where the thesis still appeals, consider substituting a similar-but-not-identical exposure — a different miner for a miner, an ETF for a single stock — preserving market participation without restarting clocks on the original position. The substitution also strengthens your position if Part IVA questions ever arise.
Real-World Examples
Grace Wiped Out Her Trading Gains
Grace banked $16,000 trading mid-caps during the year — all inside twelve months, all taxable at her 37% plus Medicare rate. Her SMSF-side portfolio had $11,000 of losses she could realise without disturbing her core holdings. Harvesting cancelled two-thirds of the trading gains outright, cutting her CGT by about $5,100. She repurchased different exposures rather than the same tickers, kept documentation of her reasoning, and repeated the exercise the following June with the remaining carry-forward.
Hassan Ordered His Offsets Correctly
Hassan held $12,000 of discounted gains from an old ETF parcel and $5,000 of fresh gains from a momentum trade, plus $9,000 of harvestable losses. Applying them to the discounted gains first — his instinct — saved around $1,700. The calculator's alternative-order readout showed applying them to the fresh gains first saved nearly double. He switched, banked $3,300, and now checks ordering every year as mechanically as he checks the deadline itself.
Wei Banked Losses Before a Windfall Year
Wei sold a struggling small-cap at an $18,000 loss in a year he otherwise owed no CGT — colleagues called it pointless. Eighteen months later he exited a property syndicate with a large gain; the carried-forward loss absorbed $18,000 of it at his top marginal rate, saving over $8,000 exactly when he needed it. The lesson he repeats to his investor group: losses realised in lean years are stored tax relief, not wasted effort.
Glossary of Terms
- CGT Discount
- The 50% reduction of assessable capital gains on assets held longer than twelve months; losses receive no equivalent treatment.
- Carried-Forward Loss
- Net capital losses unused against current-year gains, preserved indefinitely to offset future capital gains.
- Part IVA
- The general anti-avoidance rule letting the ATO deny tax benefits from schemes whose dominant purpose is reducing tax, including some sell-and-rebuy patterns.
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Ivy Sinclair-Wren
Financial Chaos Analyst
Ivy Sinclair-Wren is a Financial Chaos Analyst covering investing, AI, wealth psychology, and the emotional consequences of opening finance apps during market crashes. Based in Melbourne, she specializes in demystifying the Australian tax code and helping users navigate the intersection of spreadsheet logic and human irrationality.