Three jurisdictions on this site now answer the same question three different ways. The US wash-sale statute currently does not reach digital assets — a gap. The UK closes it mechanically — a 30-day matching rule that applies to everyone, saint and sinner alike. Australia does neither: there is no named wash-sale rule, and instead a general anti-avoidance provision, Part IVA, that asks a question no calendar can answer for you — what was the dominant purpose of the transaction?
How the Australian version works
Sell an asset at a loss and reacquire the same or substantially the same asset shortly after, and no provision automatically denies the loss — there is no 30-day window to wait out. But where the arrangement's dominant purpose was obtaining the tax benefit — crystallising a loss to offset a gain while your economic position never really changed — the Commissioner can apply Part IVA, cancel the loss, and add penalties and interest on top. The ATO has said all of this out loud: a taxpayer ruling sets out its view on wash sales, end-of-financial-year warnings have named crypto specifically, and the office points to data analytics over exchange records as the detection method. Given the data-matching program, a June sale and a July rebuy on the same platform is not a subtle pattern.
The US rule asks what you bought and when. The UK rule asks when you bought it back. The Australian rule asks why — and "why" is the only question of the three that penalties attach to.
What makes the same trade safe or not
Because the test is purpose, the same two transactions read differently on different facts. Selling a position in June and rebuying in July, with nothing else changed, days apart, sized to your accrued gains — the dominant purpose argues itself. Selling to genuinely exit — rebalancing into different assets, responding to a real change of view, staying out for a meaningful period, or accepting genuine market risk in between — is ordinary investing that happens to realise a loss. The difference is not paperwork over the same behaviour; it is behaviour. Part IVA puts the burden of the explanation on you, which is why the explanation should exist before the trade, not be composed afterwards.
The file to keep
- The reason, written when it was true. A contemporaneous note of why the position was exited — thesis broken, risk reduced, reallocation — outweighs any reconstruction offered two years later.
- The economic story of the interval. What you held instead, what moved, what risk you actually carried between sale and any reacquisition. A real interval has a story; a wash does not.
- Both legs, timestamped. Exchange records and chain data for sale and rebuy. If the pattern is innocent, the record proves it; if the record is embarrassing, that is information too.
- Loss-first sequencing kept ordinary. Realising genuine losses before genuine gains in the same year is legitimate tax management. The moment the losses only exist because the position was recycled, you have crossed from sequencing into manufacturing.
Why this matters more in the final discount year
The run-up to 30 June 2027 — the last year of the 50% discount — will produce a wave of deliberate gain realisation, and with it the temptation to manufacture offsetting losses. That is precisely the June-quarter pattern the ATO has warned about, in the years it will be watching hardest. A genuine exit survives scrutiny in any year. A recycled one, in that year, is volunteering.
Why the line stays "watch"
Purpose tests generate edge cases by design, crypto-specific applications of Part IVA are still thin on decided cases, and the ATO's published views are rulings and alerts rather than statute. We publish the framework, mark the line watch, and — as everywhere on this site — the positions await a licensed reviewer's signature before anyone should lean on them.
Purpose is a legal characterisation made on facts this page does not have. This note frames the rule; it does not clear any transaction, and reading it creates no professional relationship.