Using the Lowest In, First Out (LOFO) method, the units you purchased at the lowest price are considered sold first. Because your cheapest parcels are disposed of first, LOFO typically realises the largest capital gain on each sale. This can be useful if you deliberately want to realise gains now — for example, to use up capital losses you've already made, to take advantage of a low-income year, or to leave your higher-cost parcels available for future disposals.
Example
You bought 1 BTC at $3,000, then 1 BTC at $6,000, then 1 BTC at $2,000. You later sell 1 BTC for $4,500. With LOFO, you are considered to have sold the BTC you purchased at $2,000 — the lowest-cost parcel — so your capital gain is $4,500 − $2,000 = $2,500.
LOFO is the opposite of Highest In, First Out (HIFO): where HIFO minimises your gains by selling your most expensive parcels first, LOFO maximises them by selling your cheapest first. As with all inventory methods, we recommend discussing with your accountant or tax professional before changing your inventory method.
FAQ
Q: What is the LOFO inventory method?
LOFO stands for Lowest In, First Out. When you dispose of an asset, Summ treats the units you acquired at the lowest price as being sold first.
Q: Why would I use it?
You're migrating from Sharesight and used its lowest-cost sale allocation method — LOFO gives you matching calculations in Summ.
You want to realise gains deliberately — for example to absorb existing capital losses, or in a year where your income (and marginal tax rate) is unusually low.
You want to preserve high-cost parcels for future sales.
Q: How do I turn it on?
Go to Settings → Tax → Inventory Method and select Lowest in First Out. Your reports will recalculate automatically.
A quick comparison, using the same example — buying 1 BTC at $3,000, then $6,000, then $2,000, then selling 1 BTC for $4,500:
Method | Parcel sold | Result |
First In First Out | $3,000 (earliest) | $1,500 gain |
Last In First Out | $2,000 (latest) | $2,500 gain |
Highest In First Out | $6,000 (highest) | $1,500 loss |
Lowest in First Out | $2,000 (lowest) | $2,500 gain |
Inventory methods change when gains are realised, not the total over the life of your portfolio. We recommend speaking with your accountant or tax professional before changing your inventory method.
Is LOFO valid for the ATO?
Yes — as a specific-identification ordering, provided you keep adequate records. The ATO treats each acquisition parcel as a separate CGT asset. Where your records let you identify which parcel you disposed of, you may choose the parcel — the specific-identification (or "parcel-picking") approach; First In, First Out is only the fallback where records can't identify parcels. LOFO is simply a consistent rule for making that choice (always the lowest-cost parcel), exactly as HIFO — which we already offer to Australian users — is the opposite rule.
Note: selling your lowest-cost parcels first can also mean selling your oldest parcels, which interacts with the 12-month 50% CGT discount — confirm the strategy with your accountant. This is general guidance, not tax advice.
If you have any questions or need help, we're here for you! Feel free to reach out to us via the in-app chat in the bottom-right corner or send your inquiries to [email protected].