This tax-selling period looms as a potentially precarious one for investors – particularly those portfolios filled with small caps outside the S&P/ASX 200. The challenge lies in how the market has performed over the past 12 months.

What is tax selling? It is when an individual investor sells an asset (usually in June) to realise a capital loss. This loss can then be used to reduce or offset any capital gains realised throughout the financial year, which reduces the overall tax liability.