For many Australians, the share market rollercoaster of recent years has delivered not just wins, but some painful losses. If you’ve sold shares, crypto, property, or other assets at a loss, you may be able to turn that disappointment into a long-term tax advantage, thanks to Australia’s capital loss carryover rules. As we move through 2025, understanding these rules—and the latest ATO updates—can make a real difference to your bottom line.
How Capital Loss Carryover Works in Australia
Capital loss carryover is a tax mechanism that lets investors offset their past investment losses against future capital gains. This can mean significant savings when you eventually make profitable investments. The Australian Taxation Office (ATO) allows you to carry forward capital losses indefinitely, as long as they are recorded in your tax return for the year the loss occurred.
- Applies to: Shares, managed funds, property, crypto assets, and other capital assets.
- Offset rules: Losses must first be used to offset gains in the same year. Any excess can be carried forward to offset future gains.
- No time limit: You can carry losses forward indefinitely—there is no expiry, provided you continue to lodge returns.
- Not deductible against income: Capital losses cannot be used to reduce ordinary income like salary or interest.
For example, if you sold shares in 2023-24 and realised a $10,000 loss, but made no capital gains that year, you could carry forward that $10,000 loss. If you then sold property in 2024-25 for a $15,000 gain, you could use your carried-over loss to reduce your taxable capital gain to just $5,000.
ATO Updates and 2025 Policy Changes
In 2025, the ATO continues to ramp up its scrutiny of capital gains and losses, especially around crypto assets and property. The ATO’s data-matching program now covers a wider range of digital assets and property sales, making it crucial to keep meticulous records of your transactions.
- Crypto crackdown: The ATO now receives direct data from major Australian crypto exchanges, so unreported losses and gains are more likely to be flagged.
- Digital recordkeeping: The ATO encourages digital recordkeeping for easier auditing and faster processing of carried-over losses.
- Trusts and companies: New 2025 rules clarify that trusts and companies must meet ‘continuity of ownership’ and ‘same business’ tests to carry over losses—tightening loopholes from previous years.
These policy updates mean it’s more important than ever to accurately report all capital losses in your tax return, even if you don’t have gains to offset in that year. Failing to do so could mean missing out on future tax relief.
Real-World Scenarios: How Aussies Are Using Loss Carryover
Let’s look at two practical examples:
- Sharemarket slip, property profit: Emma lost $8,000 selling tech stocks in 2022-23. In 2024-25, she sold an investment property, realising a $50,000 gain. Her $8,000 carried-over loss reduced her taxable capital gain to $42,000—saving her around $1,880 in tax at a 23.5% marginal rate.
- Crypto swings: Jason’s crypto portfolio crashed in 2023, but he didn’t have other gains that year. In 2025, he made a $12,000 gain from selling shares. His previously reported crypto loss reduced his tax bill by about $4,500, depending on his overall income and marginal rate.
These examples show why it’s critical to keep track of your losses, even if the pain is still fresh. The ability to claim them later can offer a silver lining—sometimes years down the track.
Smart Strategies for Maximising Your Capital Loss Carryover
If you want to make the most of this tax rule, consider:
- Reviewing your portfolio before 30 June: If you have gains, consider realising some losses before EOFY to offset them immediately.
- Tracking all asset classes: Don’t forget crypto, managed funds, and collectables—capital loss rules apply across the board.
- Using digital tools: Use apps or spreadsheets to record purchase prices, sale dates, and transaction costs for all assets.
- Seeking expert advice for complex cases: Family trusts and companies face stricter 2025 rules for loss carryover, so get tailored advice if you’re affected.
And remember: you must actually sell the asset to crystallise a loss. Paper losses don’t count until the transaction is finalised.
Conclusion
Capital loss carryover is a powerful tool for Australian investors, especially in volatile times. With careful recordkeeping and a bit of strategic planning, you can turn past losses into future tax benefits—often when you least expect it. As the ATO tightens its focus in 2025, getting your paperwork right now could mean big savings in years to come.
