You can reduce the capital gains you've made this year by offsetting them with your capital losses from this year or previous years to reduce your CGT. However, you need to use the losses you’ve carried forward from previous years first. If these losses reduce your current year gains to zero, you can carry over any remaining losses to offset future gains for as long as you need.
Choosing which capital gains to offset
Did you know you can choose which gains to offset with your losses? The only exception is gains you make from collectables, including artwork, jewellery and antiques. You can only use a capital loss from collectables to offset a capital gain from collectables.
Think carefully about which gains you want to offset first. Starting with gains that aren’t eligible for the CGT discount will help reduce your CGT as much as possible.
Capital losses you can't use as an offset
You can’t offset a gain with a loss you've made from:
- personal use assets, such as boats or furniture
- CGT exempt assets, such as cars and motorcycles
- collectables that cost you $500 or less
- a lease, except if it's main purpose is producing income, such as for a commercial rental property or a car
- paying personal services income to yourself through an entity you've set up.
Still unsure about CGT and capital losses?
Take our courseExternal Link on our learning platform Essentials to strengthen your small business. You can also ask your registered tax professional for help.