Can you do loss harvesting for CGT in Australia — sell and immediately rebuy?

Capital loss harvesting — selling assets at a loss to offset capital gains — is a legitimate tax strategy in Australia. You can sell an asset at a loss to create a capital loss, which can then be used to reduce your net capital gains for the year. Unlike the US, Australia does not have a specific 'wash sale' rule that automatically disallows the loss if you rebuy the same asset shortly afterwards.

You can sell and rebuy the same asset. There is no mandatory waiting period before reacquiring a sold asset. However, the ATO has general anti-avoidance provisions under Part IVA of the Income Tax Assessment Act 1936, which can apply if a scheme's dominant purpose is to obtain a tax benefit. Pure mechanical loss harvesting where you immediately rebuy at the same price primarily to generate a tax loss could attract ATO scrutiny, particularly for large amounts or repeated patterns.

Practical considerations:

• Capital losses can only be offset against capital gains — you cannot use a capital loss to reduce ordinary income
• Unused capital losses carry forward indefinitely to future years — they do not expire
• Capital losses must be applied against unadjusted (pre-discount) capital gains first; you cannot choose to apply losses only against discounted gains
• Transaction costs (brokerage, spreads) reduce the benefit of harvesting small losses
• If the asset is in your SMSF or a company, the same general principles apply but the CGT discount differs

Keep records of every transaction, particularly the dates and prices of the sale and repurchase.