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Started ‎29 August 2018 by
Modified ‎8 June 2021 by

Working out your cryptocurrency tax can be confusing as there’s a lot to consider. To help you along the way, we’ve compiled answers to the Community’s top cryptocurrency questions. In this article we use some shortened words:

  • crypto = cryptocurrency
  • CGT = capital gains tax.

Note: this article contains general information only. If you’re seeking advice for your specific situation, you can reach out to us for formal advice.

Investor or trader

The first step is to determine whether you are a crypto investor or are carrying on a crypto trading business. It’s important to get this step right as it determines whether your activities are taxed under CGT rules or income tax rules. If you’re still unsure, read through our website for more information.

Am I an investor?

If you’re buying and selling crypto with the intention of keeping it for a long time to make a profit, you’re likely considered an investor. This means your crypto activities will be subject to CGT.

Am I a trader running a business?

If you’re mining and selling crypto, or buying and selling crypto in an organised, business-like manner, you’re likely running a business.

This means that you’ll need to treat your earnings as business income, which is subject to income tax.

How crypto is taxed

Does tax apply to every crypto activity?

Most crypto activities are taxable, either through CGT or income tax.

If you’re an investor, CGT applies when you:

  • sell or gift crypto to someone
  • trade 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

How do I calculate CGT? 

The first step is to determine your cost base. This is the purchase price of your crypto plus the costs related to acquiring or disposing of it.

Your sale price – your cost price = your total capital gain or loss

If you make a gain:

  • Report the total amount under the 18H ‘Current year capital gains’ label on your tax return. 
  • If you’ve had your crypto for more than 12 months, you may be eligible to discount your capital gain by 50% or establish what indexation factor you can apply against your capital gain. 
  • If you’ve owned your crypto for less than 12 months, you must use the other method, where you simply subtract your cost base from your sale price.
  • This final amount is reported at the 18A ‘NET capital gain’ label. Tax is then applied to your total assessable income (which includes things like wage and interest income) at standard marginal rates.

 

If you make a loss, work out your reduced cost base.              

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

Is there a way to reduce my tax?

The following tax discounts and deductions are available:

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 that to reduce your capital gains for that year. You must subtract current year losses and prior year losses from your current year gains before applying any discounts. 

If you have a net capital loss, you can carry that forward to later years. You can only use capital losses to reduce capital gains. They won’t reduce your other income.

Crypto as a ‘personal use asset’

If you buy and use crypto solely to purchase goods or services shortly after having acquired it, the crypto may be considered as a personal use asset, and there are generally no tax consequences. Keep in mind that the longer you hold your crypto, the less likely it is a personal use asset.

Cryptocurrency is not a personal use asset if you acquire, keep or use it:

  • as an investment
  • in a profit-making scheme
  • while carrying on a business.

Business deductions for mining or trading

If you’re running a mining or trading business, any expenses you incur while running your business – including electricity costs – can be allowed as a deduction. The cost of capital assets, such as hardware and software can be depreciated over their effective life as well.

You may also be able to apply the small business instant asset write-off to claim an immediate deduction for the cost of some business assets.

Reporting your crypto

Do I have to declare my crypto in my tax return?

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

  • sell or gift crypto to someone
  • trade or exchange crypto (including trading one crypto for another)
  • convert crypto into regular currency, for example, into Australian dollars
  • use crypto to purchase goods or services.


If you’re running a business, you’ll need to treat your crypto earnings as business income and report them in your tax return. Keep in mind that the trading stock rules apply instead of CGT. There are two kinds of trading stock rules:

Crypto can update daily – what kind of records do I have to keep? 

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 (their crypto address is acceptable).

You can find this information in:

  • exchange records
  • purchase or transfer receipts
  • invoices from agents, accountants or legal advisors
  • digital wallet records and keys.

There are also a number of low or no-cost services online that can help you to calculate your crypto gains or losses. 

How do I record the crypto value on my tax return?

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. 

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