Crypto Tax Loss Harvesting in Australia — The Legal Way to Reduce Your CGT Bill

Tax loss harvesting is the practice of deliberately selling assets at a loss to offset capital gains, reducing your overall CGT liability for the year. This is general information only, not tax advice. Speak to a registered tax agent before implementing any tax strategy.

How it works in principle

Australia's CGT regime allows capital losses to be offset against capital gains in the same year. If you've made a gain of A$10,000 on Bitcoin but have unrealised losses of A$4,000 on an altcoin, realising those losses reduces your net capital gain to A$6,000. Unused capital losses can be carried forward indefinitely to offset future gains. Capital losses from crypto can only be offset against capital gains — not ordinary income like salary.

The 30 June deadline

Capital gains and losses are assessed for each financial year (1 July – 30 June). To realise a loss in a given year, the disposal must occur by 30 June. Late June is when tax loss harvesting decisions are most time-sensitive for Australian crypto investors.

The wash sale question

Australia has no formal wash sale rule equivalent to the US provision. However, the ATO's general anti-avoidance provisions (Part IVA) apply to arrangements entered into with the dominant purpose of obtaining a tax benefit. Most tax practitioners advise waiting at least 30 days before repurchasing an asset sold for a tax loss. The 30-day figure is not legislated but represents a practical prudence buffer.

The 12-month CGT discount interaction

Capital losses are applied against your gains before the 50% discount is calculated. This means a A$1,000 loss offsets A$1,000 of a discountable gain, even though that gain would only have contributed A$500 to taxable income after the discount. It's generally more tax-efficient to apply losses against non-discountable gains (held less than 12 months) first where possible.

Practical steps

Before year-end, identify positions with unrealised losses and calculate the tax saving from realising each loss. Crypto tax software like Koinly or CoinLedger can generate a tax loss harvesting report showing unrealised positions ranked by potential tax saving — one of the most practically useful features these tools offer.