Can I carry tax losses forward indefinitely in Australia?

Yes — both revenue losses (subject to integrity rules like the Continuity of Ownership Test for companies and non-commercial loss rules for individuals) and capital losses can be carried forward indefinitely until they're absorbed by future income or gains. There's no time limit like the US 20-year rule.

Can a capital loss reduce my salary income?

No. Capital losses are quarantined — they can only offset capital gains, not ordinary income like salary. If you have $10,000 of capital losses and no capital gains this year, the loss carries forward until you have a future capital gain to offset against.

What's the order for applying a capital loss against a discounted gain?

Apply capital losses against the pre-discount gross capital gain first, then apply the 50% CGT discount to the residual. Wrong: discount first then losses. The right order produces a smaller taxable amount and bigger tax saving on losses.

Tax Loss Carry-Forward Calculator Australia

Carrying tax losses forward in Australia

Australian tax law lets you carry forward two distinct types of losses indefinitely: revenue losses (business losses, some rental losses) and capital losses. They behave differently. Revenue losses can be applied against any assessable income in a future year — salary, business income, interest, even capital gains in certain orderings. Capital losses are quarantined: they only offset capital gains, never ordinary income.

For individuals running a business or sole trade, the non-commercial loss rules can defer revenue losses if your business doesn't meet one of the activity tests (assessable income $20k+, profit in 3 of 5 years, real-property or other-asset value tests, or an exception for certain professional activities). Deferred losses don't disappear — they sit there until the activity passes a test or generates assessable income to absorb them.

Capital losses follow a specific application order: first against this year's capital gains, then carried forward to future years. The CGT discount (50% for individuals on assets held over 12 months) is applied AFTER capital losses — so $10,000 of capital loss applied to $20,000 of pre-discount gain leaves $10,000, which becomes $5,000 after the 50% discount, not $10,000 minus a discounted amount. Get the order wrong and you wastefully under-claim.

Methodology & sources

Estimates the tax saving from applying a carried-forward loss equal to min(prior-year loss, current income/gain). For revenue losses applies the FY 2025-26 individual tax brackets to compare tax with vs without the loss. For capital losses the reduction in taxable amount is shown but the discount-then-loss order is not fully modelled — apply capital losses first, then the 50% CGT discount on the residual pre-discount gain. Doesn't enforce non-commercial loss tests, the Continuity of Ownership Test for companies, or related-party transfer rules. General information only — speak to a tax agent.

Tax Loss Carry-Forward Calculator Australia

Carrying tax losses forward in Australia

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Methodology & sources