Australia has no fixed 30-day wash sale rule for shares. A sale and repurchase can still attract Part IVA, the general anti-avoidance rule, when the arrangement creates a tax benefit and the facts support the required tax-avoidance purpose.
The ATO explains its view in Taxation Ruling TR 2008/1 and Taxpayer Alert TA 2008/7. The ruling says the result depends on a careful weighing of all relevant circumstances. It does not provide a safe waiting period.
What the ATO means by a wash sale
The concern is an arrangement that realises a capital loss or deduction while the taxpayer keeps, restores or shifts substantially the same economic exposure. The steps may include selling and buying the same asset, buying a substantially similar asset or using an associate or related entity.
Part IVA does not make every loss sale suspicious. Traders close losing positions for ordinary reasons: a stop is hit, the setup fails, risk limits change or capital moves to a different opportunity. The records should show what decision you made and what changed in your exposure.
If you are preparing several disposals for tax time, the Australian shares CGT tracking guide helps connect each sale to its acquisition parcel and cost base.
Compare two fictional scenarios
Scenario 1: exposure barely changes
Mina owns 2,000 shares in fictional PINE.AU. On 27 June, the position has a $9,000 unrealised loss. She sells all 2,000 shares, then buys the same quantity the next morning. Her notes say only, "Use loss against this year's gain." The price exposure, quantity and investment thesis stay the same.
Those facts resemble the arrangements addressed by the ATO ruling. The short interval is relevant, but it is not the whole test. The planned return to the same exposure and the tax-focused record are more important.
Scenario 2: a trading rule closes the position
Leon owns 2,000 shares in fictional PINE.AU. A profit warning causes a gap below the stop recorded in his trade plan, so he sells. He removes the ticker from his active setup list and reallocates the cash. Six weeks later, a new result and price setup meet his written entry rules, so he opens a smaller position.
The second scenario contains evidence of two separate investment decisions and changed exposure. It does not prove that Part IVA cannot apply. It gives the tax adviser real commercial facts to assess.
There is no Australian day-count safe harbour
Waiting 31 days does not make an Australian arrangement automatically acceptable. Repurchasing sooner does not make it automatically unacceptable. Timing is one fact among the manner, substance, financial effects and surrounding circumstances of the arrangement.
Do not copy the US rule into an Australian tax workpaper. US Internal Revenue Code section 1091 uses a 30-day window around a loss sale of stock or securities. Australia's Part IVA analysis is purpose and facts based.
Keep a decision record that existed at the time
A note written before or when you exit is more useful than a polished explanation created months later. Record:
- the security, quantity, parcel and realised loss
- the exit trigger, with a chart, announcement or strategy rule if relevant
- the date and time of the decision and order
- what happened to the sale proceeds
- whether you retained exposure through another account, entity or similar asset
- the reason for any later repurchase and what changed
- the size and risk of the replacement position
Keep broker confirmations and account statements as well. A journal explains the choice, while the broker records prove the transactions.
The trading journal template gives you a repeatable pre-trade and post-trade format. For a first journal, use the step-by-step setup guide.
Questions to ask before tax-loss harvesting
- Would I sell this position today if the tax loss had no value?
- Am I planning to restore the same economic exposure?
- Does another account, SMSF, trust, company or associate enter a related trade?
- What commercial event or trading rule supports the exit?
- If I re-enter, what new information or setup supports that decision?
- Can my tax agent see the complete sequence across all relevant accounts?
Tax-loss harvesting can involve a real disposal of an investment you no longer want. The risk rises when offsetting steps leave you in substantially the same financial position apart from the tax benefit.
Common mistakes
Treating 31 days as permission
Australia does not use the US bright-line rule. A longer interval cannot rescue a pre-arranged tax scheme by itself.
Moving the replacement trade to another entity
A sale in a personal account and purchase through an SMSF or family entity may still form part of the relevant arrangement. It can also create separate superannuation, trust or related-party issues.
Writing vague reasons after year end
"Portfolio management" says little. Record the broken setup, changed allocation, new information or other actual reason at the time.
Assuming software proves purpose
A trade log helps preserve evidence. It cannot decide the dominant purpose under Part IVA or establish that the ATO must accept a loss.
Wash sale FAQs
Is selling a loser near 30 June illegal?
No. A real disposal can produce a capital loss. The Part IVA concern is the full arrangement, including any steps that preserve or restore substantially the same exposure for the relevant tax purpose.
Can I buy another company in the same sector?
Different securities do not create an automatic exemption. Compare their economic exposure and the full facts. Record why the replacement is a different investment decision.
Does a stop-loss note settle the issue?
No. A contemporaneous stop rule is useful evidence, but the adviser and ATO can consider the complete sequence, including a planned repurchase or related-account trade.
Use Swingfolio as the trade record, then get tax advice
Swingfolio can keep the entry, exit, strategy and contemporaneous notes beside the transaction. During an active trial, you can import CSV trades and review them before saving. Export the history for your tax agent and include broker records plus activity from other relevant accounts.
Start the 30-day trial and document the reason for each exit while it is fresh.
This article is general information and not tax advice.