Learn · How gains are taxed
Capital losses: what they can offset, and what they cannot
A capital loss reduces capital gains and nothing else. It cannot touch your salary. Unused losses carry forward, and which gain you spend them on changes what you pay.
A capital loss is not a deduction. It cannot be set against your wages, your interest, or your dividends. It reduces capital gains, and only capital gains. If you had no gains this year, the loss does not reduce your tax bill at all — it waits.
Unused losses carry forward
A loss you cannot use this year is carried forward to future years and stays available until a capital gain comes along to absorb it. There is no time limit for individuals, and no requirement to use it in any particular year — but it also never expires into cash. It only ever exists as a reduction of some future gain.
The ordering that costs people money
Losses are applied to gains before any discount is calculated. That single rule decides how much a loss is worth, and the answer depends entirely on which gain you spend it against.
The same loss, spent two ways
Gain A $10,000, held 3 years (discountable)
Gain B $10,000, held 6 months (not discountable)
Loss $10,000
Loss against A: A becomes 0. B assessed in full.
Taxable gains $10,000.
Loss against B: B becomes 0. A halved to $5,000.
Taxable gains $5,000.
Same holdings, same loss, same year, and a $5,000 difference in what is assessed. The loss did twice the work in the second case purely because of the gain it was applied against.
A matched pair is the worst case. A $10,000 discountable gain cancelled by a $10,000 loss leaves nothing to discount and nothing to carry forward. The discount was never used, and the loss bought only half of what it could have.
Which losses count
- Losses on shares, units, crypto, property and other CGT assets.
- Not losses on assets held for personal use, which are disregarded.
- Not a fall in value you have not realised — until a CGT event happens, there is no loss to claim.
Selling purely to book a loss and buying straight back is a wash sale, and the ATO applies anti-avoidance rules to it. The loss being real is not the question; the question is whether the disposal had any purpose beyond the tax outcome.
Where this comes from
Written against ATO — CGT discount (order of losses and discount), last updated 29 June 2026. Checked 1 September 2026.
General information about how the rules work, not financial or tax advice. Your own circumstances change the answer.
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