Tax Selling in Australia: 2025 EOFY Strategies & ATO Updates

As the end of the financial year (EOFY) approaches, ‘tax selling’ becomes a hot topic among Australian investors. But what is tax selling, how does it work under the latest 2025 rules, and what should you watch out for if you’re planning to use it as part of your investment strategy?

What Is Tax Selling—and Why Do Investors Use It?

Tax selling (sometimes called ‘tax loss harvesting’) is the practice of selling investments at a loss to offset capital gains elsewhere in your portfolio. The goal? To reduce your overall tax bill by lowering your net capital gains.

• Example: You sell shares in Company A at a $5,000 loss, and shares in Company B at a $7,000 gain. The loss can offset the gain, so you’re only taxed on $2,000 in net capital gains.
• It’s commonly used in June as investors review their portfolios before 30 June, the close of the Australian financial year.

2025 Policy Updates and ATO Crackdowns

The Australian Taxation Office (ATO) has increased its scrutiny on tax selling in 2025, particularly around ‘wash sales’—where investors sell an asset to claim a loss, then buy it back soon after. The ATO’s 2025 guidance makes it clear: if the main purpose of your sale is to gain a tax advantage, and you repurchase the same or a substantially similar asset, you could be targeted for avoidance.

• ATO data-matching: The ATO now cross-references brokerage and share registry data more closely, meaning suspect patterns (like repurchasing the same shares within 45 days) are much more likely to be flagged.
• Penalties: If the ATO determines your transaction was a wash sale, you may have your deduction denied and face penalties or interest charges.

Key update for 2025: The ATO has issued a new Tax Determination on wash sales, including cryptocurrency and ETF transactions, reflecting the broader range of assets Australians now hold.

How to Approach Tax Selling in 2025: Smarter, Not Riskier

Tax selling isn’t just for wealthy investors—it can be a useful tool for anyone with shares, ETFs, managed funds, or even crypto assets. Here’s how to approach it in 2025:

• Review your portfolio for underperformers: Don’t just focus on tax benefits—consider whether it’s wise to hold onto a losing investment.
• Document your rationale: If you sell, keep records of your reasoning and any changes to your portfolio. The ATO may ask for this if they investigate.
• Avoid wash sales: Wait a reasonable period before buying back the same asset—or consider diversifying into a similar, but not identical, investment.
• Consider carry-forward rules: If your capital losses exceed your gains, you can carry them forward to future years—no need to rush and sell everything at once.

Example scenario for 2025: Maya holds shares in a tech ETF that’s down 15% since purchase. She’s also sold some property shares at a profit. By selling the tech ETF before 30 June, she offsets her gains—but waits 60 days before re-entering the tech sector, reducing ATO scrutiny.

Real-World Considerations: Tax Selling and Market Timing

While tax selling can be a valuable strategy, it shouldn’t override sound investment principles. Beware of the risks:

• Market rebound risk: If you sell, the asset may recover quickly, and you could miss out on gains.
• Transaction costs: Brokerage and spread costs can eat into any tax benefits.
• Portfolio drift: Overdoing tax selling can leave your portfolio out of alignment with your long-term goals.

Tax selling works best as part of a broader EOFY review, considering your risk profile, goals, and the latest ATO rules.

Conclusion

Tax selling remains a legitimate and popular EOFY tool for Australian investors in 2025, but the rules are tightening. By keeping up with ATO guidance, documenting your strategy, and focusing on your long-term financial health, you can use tax selling to your advantage—without falling foul of the authorities.