Capital losses and your net capital gain

How capital losses work

You make a capital loss when the reduced cost base of an asset is more than its capital proceeds. Losses are used first against your current-year gains, then any net capital loss from earlier years is applied, in the order the losses were made.

The best order

You choose which gains to offset. Apply losses against gains that don’t qualify for the discount first. Example: a $10,000 loss against a $10,000 short-term gain saves tax on $10,000; against a discount gain it saves tax on only $5,000. Our calculator applies losses in the optimal order automatically.

Carrying forward

If losses exceed gains you have a net capital loss, which you carry forward and report in your tax return each year until it’s used. It can’t be transferred to another person; trusts can’t distribute losses to beneficiaries.

Losses you can’t use

• Personal use assets (boats, furniture) – losses are ignored
• Exempt assets such as cars
• Collectables – losses only offset collectable gains
• Most leases (unless held to produce income)
• “Wash sale” losses may be denied

From the 2027–28 income year the law sets the order: capital losses are applied first to deferred gains (the part of a gain that accrued before 1 July 2027), then to gains accruing after 1 July 2027. Our calculator follows this order.

General information only – not financial or tax advice. See our disclaimer. Spotted an error? Email [email protected].