Crypto and your taxes

Most people are investors. If you’re buying and selling crypto with the intention of making a profit, you’re likely considered to be an investor. This means your crypto activities will be subject to CGT.

If you’re mining and selling crypto, or buying and selling crypto in an organised, “business-like” manner, usually holding only for a short time, you’re likely running a business.

You’ll need to treat your earnings as business income. This means you’ll need to report your income to us and pay tax on it.

If you're using crypto assets in a business this opens in a new window , check out crypto assets used in business this opens in a new window  over on our website.

Yes, most crypto activities are taxable, either under CGT or as assessable income.

Digital wallets can contain different types of crypto and, each one is a separate CGT asset. You need to report CGT events on your tax return this opens in a new window , whenever they occur.

If you’re an investor and dispose crypto, this is treated as a CGT event. It includes when you:

• sell, donate or gift crypto.

• trade, swap or exchange crypto (including trading one crypto for another).

• convert crypto into regular (fiat) currency, for example, into Australian dollars.

• use crypto to purchase goods or services.

If you’re a trader running a business, income tax applies when you:

• mine crypto.

• earn crypto through staking, yield farming and airdrops.

• get paid in crypto.

• dispose of crypto as part of a business activity.

If you receive staking rewards and airdrops, remember:

• to declare these crypto assets as income.

• a CGT event may occur when you dispose of these rewards.

First you need to work out your cost base. You can use this equation to work out your capital gain or loss:

Your sale price – your cost base = your capital gain or loss.

Your cost base is the amount you paid for your crypto and any costs for:

• obtaining your crypto,

• holding your crypto in digital wallets, and

• trading your crypto.

Any tax deductions won’t be included in your cost base.

If you didn't pay anything, you must use the market value. This is the value of your crypto in Australian dollars. You can get this from a reputable online crypto asset exchange.

If you gifted your crypto to someone, your ‘sale price’ is the market value at the time you gave it away. For the person receiving that gift, the market value becomes their cost base.

If you make a capital gain:

• Report the total amount under the 18H ‘Total current year capital gains’ label on your tax return.

• If you’ve had your crypto for more than 12 months, you may be able to discount your capital gain by 50% this opens in a new window .

• If you’ve owned your crypto for less than 12 months, you subtract your cost base from your sale price.

• This final amount is reported at the 18A ‘Net capital gains’ label. This amount is then added to your total assessable income (which includes things like wage and interest income) and is taxed at your income tax rate this opens in a new window .

If you make a capital loss, work out your reduced cost base this opens in a new window :

• Use your capital loss to reduce an existing capital gain or carry it forward to a future year.

• To report a net capital loss, enter ‘0’ at the 18A ‘Net capital gains’ label.

• Enter your total capital loss at the 18V ‘Net capital losses carried forward to later income years’ label.

You can only claim a loss for crypto that you’ve disposed of. You can’t claim a ‘paper loss’ when the value of your crypto has gone down but you still hold it.

See our website for more info on how to work out and report CGT on crypto this opens in a new window .

The following tax discounts and deductions are available:

Income tax deductions

You can claim things like subscriptions and the cost of managing your tax affairs straight away. Other expenses form part the cost base when you dispose of the crypto.

Capital gains discount

If you hold crypto as an investment for 12 months or more, you may be entitled to a CGT discount to reduce the capital gain you make when you dispose of it.

If you have a capital loss, you can:

• use it to reduce your capital gains for that year. To do this, subtract current year losses and prior year losses from your current year gains before applying any discounts

• carry it forward to use in future years.

You can only use capital losses to reduce capital gains. They won’t reduce your other income.

Business deductions for mining or trading

If you're running a mining or trading business, you can claim certain deductions. For example, the cost of buying crypto assets and other expenses you incur while running your business (including electricity costs). You can depreciate the cost of capital assets, such as hardware and software over their effective life as well.

For more info, check out business tax deductions this opens in a new window .

If you bought crypto as an investment, you only need to declare it in your income tax return when there’s been a CGT event.

Remember, you still need to report the CGT event even if you made a loss or are applying the personal use asset exemption.

Staking rewards or airdrops

You need to declare staking rewards and airdrops. Add the value of these under the heading ‘Other income’ in your tax return. Make sure to do this in the financial year you received it.

When you later sell the crypto you earned through staking or airdrops, the amount you reported as income will be your cost base for calculating CGT.

Reporting crypto while running a business

If you’re in the business of trading crypto, you must complete the business section of your tax return. Remember:

• Trading stock rules apply instead of CGT.

• To report the value of your crypto at the start and end of the financial year.

• An increase in value is income, while a decrease is an allowable deduction.

Check out our value trading stock this opens in a new window  page for more details.

Everybody doing any kind of crypto transaction, needs to keep a record of the following:

• the date of the transaction.

• the value of the transaction in Australian dollars (you can get this from a reputable online exchange).

• what the transaction was for.

• who the other party was (or their crypto address).

You can find this information in:

• exchange records.

• purchase or transfer receipts.

• invoices from agents, accountants or legal advisors.

• digital wallet records and keys.

All reporting to the ATO must be made in Australian dollars.  To convert the value of crypto to Australian dollars you can use the crypto value as published by a reputable exchange on the date of the relevant transaction. 

Remember to keep a record of when and where you obtained that rate, as you’ll need to give evidence if we request it.

Short answer – no. If you’re living in Australia temporarily and are an investor, you don’t have to pay CGT on crypto, as it is not Taxable Australian Property (same goes for shares). You do still have to report income related to your investments, like staking rewards and airdrops (and dividends).

Sadly, many people have fallen victim to scams or have had their crypto assets stolen.

If you can’t recover your assets, you can claim a capital loss.

To do this, you’ll need to provide some evidence, including:

• details of when you lost access to your crypto assets, wallet or platform, and

• proof the crypto assets were kept or maintained by you (for example, transactions linked in your name).

For more details about loss or theft of crypto assets this opens in a new window , see our website.

If you’ve lost access to your crypto because an exchange or platform you were using has gone into administration, you may be able to claim a capital loss on your worthless crypto.

You can only do this once the liquidator or administrator declares in writing that you will not receive any further distribution or income. This may be in a year later than when you lost access, if the administration process takes some time.

For more information on the nature of crypto assets and the risks in using them see ASIC’s Money Smart website this opens in a new window .