Capital losses

It's also possible to make a capital loss on investments.

Simply, this is where you sell an investment for less than its cost.

A capital loss reduces any taxable capital gains you have made but cannot be claimed as a tax deduction or used to offset against other assessable income.

If there are no capital gains in the same year as the loss, the capital loss can be carried forward to offset against any capital gains made in future years. The capital loss can be carried forward indefinitely.

Importantly, any capital losses are offset against any capital gains made prior to applying the discount factor.

Individuals are entitled to a 50% discount on capital gains made. Other entities are subject to different rates of discounts as discussed below. The relevant discount is applied to the net capital gain – this is the gross capital gain less any capital losses.