Yes, capital losses on crypto can offset capital gains in Australia — but they cannot reduce your salary or other income. This guide explains exactly how crypto losses work, carry-forward rules, and the ATO wash sale rule.
When you sell, swap, spend or gift crypto for less than its cost base (what you originally paid including fees), you have a capital loss. The important distinction in Australian tax law is that capital losses sit in a separate category from other income — they can only be used against capital gains, not against your salary, rental income, or other ordinary income.
This is different from some other countries and from trading losses in a business context. For most Australian crypto investors classified as individuals (not traders), a capital loss from crypto reduces only the capital gains portion of your taxable income, never your salary or other earnings directly.
| Can offset | Cannot offset |
|---|---|
| Capital gains from selling other crypto | Salary, wages or employment income |
| Capital gains from selling shares | Rental income |
| Capital gains from selling investment property | Business income |
| Other capital gains in the same year | Interest or dividend income |
| Capital gains in future years (carry-forward) | Losses from personal use assets |
If your total capital losses for the year exceed your total capital gains, the unused loss does not simply disappear. It carries forward indefinitely — there is no time limit — and can be applied against capital gains in any future income year. You do not need to do anything special to activate this; it happens automatically when you complete your tax return correctly.
You must report the carry-forward loss in your tax return each year, even in years when you have no capital gains to offset it against, to preserve your entitlement to use it later.
If your crypto qualifies as a personal use asset (bought and used within a short period mainly for personal purchases), any capital loss on that crypto is completely disregarded — you cannot use it at all. This is intentional: the personal use exemption is meant to remove the tax burden on genuine everyday personal spending, but it works in both directions. You get the gain exempt, but you also cannot claim the loss.
In practice, very little crypto actually qualifies as a personal use asset given the ATO's narrow definition, so this exception rarely comes up.
The ATO has explicitly warned against wash sales involving crypto. A wash sale occurs when you sell a crypto asset at a loss and quickly reacquire the same or a substantially identical asset, with the primary purpose of generating a tax loss while maintaining your economic exposure.
If you've permanently lost access to crypto (forgotten wallet passwords, lost hardware wallet with no backup) or had crypto stolen, you may be able to claim a capital loss — but the ATO requires strong evidence that the loss is permanent and unrecoverable. Evidence should include wallet addresses, records of transactions, proof of ownership, and documentation of failed recovery attempts.
If a crypto exchange collapses and goes into administration, the CGT event generally occurs when the administration is finalised and you know the final outcome of your claim — not when the exchange first freezes withdrawals.
Enter your purchase price, sale price and fees to see your exact capital gain or loss and estimated CGT payable.
Crypto Loss Calculator →