Have you dabbled in cryptocurrencies during the last year and now wonder how crypto is actually taxed in Australia? To understand the tax rules better, The Australian Tax Office (ATO) has published guidance on the taxation of Bitcoin and other cryptocurrencies to help people in Australia file and report their taxes according to the law. We have written this tax guide with the goal of breaking down all the difficult jargon into simpler terms so that you will gain a better overview of the current tax implications. In this complete tax guide, you will therefore learn everything you need to know about how crypto is taxed in Australia, how much tax you pay on your crypto gains, how to calculate your crypto taxes, how to minimize your capital gains, how to file your crypto taxes to the Australian Tax Office, and how to use a crypto tax calculator to generate all the tax reports you need.
Just a heads up! This guide is quite extensive due to the complex nature of cryptocurrency taxes. While we recommend reading this guide from A to Z the first time to make sure you don’t miss out on anything important, you can also use the menu navigation on the right side to jump to any specific crypto tax question later.
We are also updating this guide regularly based on the latest tax guidelines and statements from the ATO. All updates will be listed below so that you can quickly see if anything has been updated since your last visit:
Latest updates
- June 29, 2022: Updated for 2021/2022
- May 25, 2021: Updated for 2020/2021
- June 7, 2020: Updated for 2019/2020
- May 24, 2019: The first version published
Let’s start with the most important question of all…
Do you pay taxes on crypto in Australia?
Yes, both income and capital gains from cryptocurrency are taxed in Australia. Any cryptocurrency sold during the tax year that you made profits on must be reported to the ATO in your annual tax return. You must also report any cryptocurrency received as income such as staking, airdrops, or interest.
In the next section, we will look closer at how crypto is actually taxed in Australia and the difference between Capital Gains Tax and Income Tax.
How is crypto taxed in Australia?
Cryptocurrencies are not considered legal tenders such as US Dollars or euros in Australia. Instead, cryptocurrencies are treated similarly to “property” for tax purposes. This means that each disposal of a cryptocurrency asset can trigger a Capital Gains Tax (CGT) event. For this reason, you will need to calculate capital gains each time you sell, trade, spend, or otherwise dispose of a cryptocurrency.
You might also need to pay Income Tax on some of your cryptocurrencies. Generally speaking, cryptocurrency received from activities such as staking, interest payments, or airdrops is considered income by the ATO.
It’s important to be aware that how your crypto is actually taxed depends on whether the ATO considers you to be an individual investor or if you are carrying on business activity. We will go into more detail about this later in this guide.
Crypto tax rates Australia
In Australia, capital gains are taxed at the same rate as the marginal income tax rate. This means that you will pay anywhere between 0% and 45% on your crypto gains, depending on how much your total income is during the financial year.
| Income | Tax Rate |
|---|---|
| $0 – $18,200 | 0% |
| $18,201 – $45,000 | 19% of income exceeding $18,200 |
| $45,001 – $120,000 | $5,092 + 32.5% of income exceeding $45,000 |
| $120,001 – $180,000 | $29,467 + 37% of income exceeding $120,000 |
| $180,001+ | $51,667 + 45% of income exceeding $180,000 |
Please note that the tax rates above do not include the Medicare levy of 2%.
Individual investor or business activity
There are different tax rules regarding whether you are considered an individual investor or if your cryptocurrency transactions are considered a business activity.
To be carrying on business according to the ATO, you will usually:
- Carry on the activity for commercial reasons
- Undertake activities in a business-like manner (eg. preparing a business plan, acquiring capital assets or inventory)
- Prepare accounting records
- Intend to make a profit (even if you are unlikely to do so in the short term)
- Usually repetition and regularity in your business activities
While it is not entirely clear what constitutes a business activity, the ATO goes on to say that it will depend on the particular facts and circumstances of each specific case. One of the most important things to consider is that if you are considered to be carrying on a business, you are not entitled to the 50% CGT discount that individual investors are. We will explain the CGT discount in more detail later.
Here are some key facts that separates an individual investor from a business activity:
| Individual investor | Business activity | |
|---|---|---|
| Tax rule | CGT rules | Trading stock rules |
| Are costs deductible? | Yes | Yes |
| CGT discount allowed? | Yes | No |
Most Australian taxpayers that have bought or sold cryptocurrency will be considered individual investors by the ATO and will therefore pay Capital Gains Tax on their profits.
However, keep in mind that the more frequently you trade, and depending also on the size of your trades, the more likely it is that you can be considered as carrying on a business. If you are in doubt about this, we recommend contacting a tax professional in Australia or the ATO directly.
How to calculate capital gains in Australia
A capital gain occurs when you sell a cryptocurrency for more than the original purchase price. On the other hand, if the sales price is lower than the purchase price, it is considered a capital loss. All values used to determine a capital gain or loss must be in Australian dollars at the time when the transaction happened.
The general formula for calculating capital gain is:
capital gain = selling price – purchase price
If you for some reason cannot establish the original purchase price, the safest approach is to consider the value to be zero. If you have received cryptocurrency from staking or airdrops, you should use the fair market value (FMV) in AUD at the time of receipt as your initial purchase price.
The Australian Tax Office has not published official recommendations for which accounting method to use for calculating capital gains. However, taxpayers are free to choose between the following accounting methods:
- FIFO – First in First out
- LIFO – Last in First out
- HIFO – Highest in First out
This is similar to what is practiced in most other countries. The former accounting method, FIFO, is in general recommended by most Australian tax accountants today.
Most cryptocurrency tax calculators like Coinpanda support both FIFO, LIFO, and HIFO cost basis methods and will calculate your capital gains for all cryptocurrency transactions automatically.
Is buying crypto taxed in Australia?
Whether buying crypto is taxed or not depends on how you pay, or more specifically, what currency you dispose of according to the ATO. The tax rules for buying crypto are different if you are paying with fiat currency or with cryptocurrency.
Let’s break it down:
Buying cryptocurrency with fiat currency (Ex: AUD → BTC)
The ATO does not consider buying crypto and paying with fiat currency a taxable event. This is because only the currency disposed of is considered for Capital Gains Tax purposes.
You should, however, keep track of all your purchases and complete transaction history so that you can calculate the cost basis correctly when you sell the purchased cryptocurrency in the future. Remember to also keep track of fees and other transaction costs which can be included in the cost basis and therefore used to reduce your net gains.
Buying crypto and paying with another crypto (Ex: ETH → SOL)
The guidance issued by the ATO states clearly that exchanging (or trading) one cryptocurrency for another is similar to disposing of one CGT asset and acquiring another CGT asset. This means that trading one crypto for another is a taxable event in Australia.
Further, the guidance states that the sales proceeds should be accounted for in Australian dollars by looking up the fair market value of the cryptocurrency received. If you cannot value the crypto received at the time of the transaction, you can find the market value (in AUD) of the cryptocurrency sold instead.
Is selling crypto taxed in Australia?
Selling cryptocurrency for fiat currency (Ex: BTC → AUD)
Selling cryptocurrency for fiat currency is considered a disposal by the ATO and triggers therefore Capital Gains Tax (CGT).
The ATO states clearly that each individual cryptocurrency is a separate CGT asset and should be valued separately. This means you need to calculate capital gains for Bitcoin, Ethereum, Solana, etc separately.
Selling crypto for another crypto (Ex: ETH → BTC)
Selling crypto for another crypto is similar to buying crypto for another crypto, and is therefore considered a taxable CGT event by the ATO.
Example 1
Callum bought 4 ETH for $600 in 2020. One year later he buys another 2 ETH for $2,000. Now, Callum owns 6 ETH which he has paid a total of $2,600 for.
In January of 2022, Callum decides to sell his entire investment. He sells 6 ETH and receives $15,000 in exchange. His transactions can be seen in the below table:
| Type | Date | Amount | Price | Cost Basis | Capital Gains |
|---|---|---|---|---|---|
| Buy | 2020-06-08 | 4 ETH | $600 | $600 | – |
| Buy | 2021-04-17 | 2 ETH | $2,000 | $2,000 | – |
| Sell | 2022-01-28 | 6 ETH | $15,000 | (?) | (?) |
To calculate his capital gains, Callum needs to find the total cost basis for the 6 ETH he has sold. This is simply the total initial cost ($2,600) since he is now selling his entire investment. The total capital gain is then found as $15,000 – $2,600 = $12,400.
| Type | Date | Amount | Price | Cost Basis | Capital Gains |
|---|---|---|---|---|---|
| Buy | 2020-06-08 | 4 ETH | $600 | $600 | – |
| Buy | 2021-04-17 | 2 ETH | $2,000 | $2,000 | – |
| Sell | 2022-01-28 | 6 ETH | $15,000 | $2,600 | $12,400 |
Now that Callum has worked out his capital gains, he simply needs to report this value on the annual tax return so that he will be taxed as per his marginal income tax rate.
NB! Keep in mind that we ignored the CGT discount in this example for simplicity. We will look at this in more detail in another example later in this guide.
Crypto margin and futures trading
Futures and margin trading have become very popular in the last few years. Instead of buying or selling cryptocurrency you actually own, futures trading lets you borrow funds from the exchange to speculate if the price will go up or down in the future. The former is often referred to as going long, while the latter is going short. Margin trading works in a similar fashion where you borrow funds that can be used for buying or selling cryptocurrency such that you can increase your purchasing power. For both futures and margin trading, there are usually costs involved such as funding or interest payments that can trigger a taxable CGT event.
When you trade futures on an exchange like FTX, you will open a position each time you make a buy or sell order. When the position is closed, you will have made either a gain or loss. Margin trading is somewhat different since you first have to take out a loan that will accrue interest until the loan is paid back in full. After taking out a loan, you can buy or sell crypto similar to how you would normally do. Keep in mind that you are buying or selling using borrowed funds that you have to pay back later in the future!
The ATO has not yet issued specific tax guidance for the treatment of cryptocurrency futures or margin trading. However, the safest approach is to include the gains or losses in your total Capital Gains Tax calculations. You should also include capital gains arising from funding or interest payments paid to the exchange since this will be considered a disposal from a tax perspective.
Crypto tax software such as Coinpanda calculates your capital gains for margin and futures trades automatically so you don’t have to do this manually.
For more information about cryptocurrency margin and futures trading, please refer to our detailed article on this topic:
Taxes on mining and staking crypto
Cryptocurrency received as payment for mining is subject to tax treatment in almost all countries, with Australia being no exception. However, when you are taxed depends on whether your mining activity is classified as a business or just a hobby.
Mining cryptocurrency as a hobby
We have some good news for you – if you are mining cryptocurrency as a hobby, you will not pay any tax when you receive the crypto in your wallet! Instead, you will pay Capital Gains Tax when you dispose of the received cryptocurrency at a later time. Since you did not pay anything for acquiring the assets, you should use a cost basis equal to zero.
Mining cryptocurrency as a business
If you are mining as a business, any income received should be included in your assessable income. You can use relevant market rates from reputable exchanges to determine the value in Australian dollars. You are allowed to deduct certain expenses that are directly related to the mining operation such as electricity costs.
Cryptocurrency received from mining is treated as trading stock. When you are in a business, the assessable income is both proceeds from the disposal of trading stock, but also an increase in the total trading stock value at the end of the year compared to the initial amount at the start of the year. This means that even if you don’t sell any of the cryptocurrency received from mining, you might still have an assessable income that will be taxed. You will pay tax on the net income, which is your total income less deductions, at your marginal income tax rate.
Staking of cryptocurrency
The ATO mentions the taxation of staking rewards briefly in their guidance. Tokens received as staking rewards should be reported and taxed as ordinary income at the time the tokens were received. This means that you most likely need to pay tax even if you don’t sell the cryptocurrency you have received.
If you later decide to sell the tokens, the cost basis (acquisition cost) will be the same as what you reported as your ordinary income using the fair market value at the time they were derived.
Other taxable transactions in Australia
We have so far covered some of the most typical scenarios that concern Australian taxpayers. But there are also many other different ways to interact with cryptocurrencies that might trigger a taxable event. Below, we will comment briefly on the tax treatment of other transaction types not already mentioned.
Tax on airdrops
Airdrop of a cryptocurrency or token is often done as part of a marketing or advertising campaign. In some cases, you will need to register before a deadline to become eligible to receive tokens. You may also receive tokens just from holding another cryptocurrency in your wallet or on an exchange.
Similar to tokens received as staking rewards, tokens received through an airdrop are classified as ordinary income at the time when they became in your possession. You need to look up the fair market value to determine the value in AUD.
Tax on hard forks
According to the ATO, cryptocurrency received from a hard fork should neither be taxed as ordinary income nor as a capital gain at the time when the split happened. Instead, you will trigger Capital Gains Tax when you actually dispose of the coins later. The cost basis of the received cryptocurrency should be considered zero – which makes sense since you did not pay anything to acquire them.
For more information about how the ATO considers hard forks, see this article.
Tax on ICOs & IEOs
The ATO has not provided specific guidance for the tax treatment of ICOs or IEOs, but since this is essentially similar to crypto-to-crypto transactions, we can treat such transactions similarly for tax purposes. This means that if you invest in token XYZ and pay with Bitcoin, you will have to calculate capital gains on the Bitcoin disposed of. You will need to use the fair market value of Bitcoin on the date you made the investment. This value will also become the cost basis for the newly purchased tokens.
Gifting cryptocurrency
As stated in the crypto guidance issued by the ATO, gifting cryptocurrency is considered a disposal similar to selling cryptocurrency. This means that you need to work out the capital gains of the crypto you have gifted to someone else. It does not matter if you do not receive anything in return as it is still considered a disposal and CGT event.
On the contrary, receiving cryptocurrency as a gift from someone is not considered a CGT event, but you do need to calculate the fair market value (in AUD) at the time you received the gift. This value will become your cost basis which will be used to calculate the capital gain or capital loss if you decide to dispose of the coins later.
Tax on received interest
If you are lending out your cryptocurrency on an exchange or DeFi protocol and are paid interest in return, you need to consider this as taxable income which should be reported in your tax return. The ATO seems to not mention this specifically in their guidance, but a safe approach is to treat cryptocurrency received as interest similar to staking explained earlier.
This means you should report any interest received as ordinary income using the fair market value at the time of receipt.
Other crypto income
Today, some employers are giving the option to their employees to have their salaries paid out in cryptocurrency instead of Australian dollars. The ATO states that crypto received as payment for salary or wages is considered a normal salary, and you should report the value of the cryptocurrency received on your income tax return.
If you are in doubt about what you need to report, your employer should provide you with a payment summary, together with other reportable fringe benefits if any, for each income year. You need to convert the value into AUD using price data from reputable exchanges on the day you received the cryptocurrency as salary.
Taxes on lost or stolen crypto
To determine if you may be able to claim a capital loss due to no longer having access to your cryptocurrency, you need to first consider if the asset can be replaced or not. If you actually lost your private keys, and there are no ways to recover them, the cryptocurrency most likely cannot be replaced either. The same rules apply to cryptocurrency lost from theft also.
The ATO has published guidelines for evidence you must provide in order to claim a capital loss:
- When you acquired and lost the private key
- The wallet address that the private key relates to
- The cost you incurred to acquire the lost or stolen cryptocurrency
- The amount of cryptocurrency in the wallet at the time of loss of the private key
- That the wallet was controlled by you (for example transactions linked to your identity)
- That you are in possession of the hardware that stores the wallet
- Transactions to the wallet from a digital currency exchange for which you hold a verified account or is linked to your identity
In essence, this means that you need to satisfy two criteria in order to claim a successful capital loss:
- You must prove that there is no way of accessing or retrieving the coins now or in the future
- You must prove ownership of the coins or the wallet before you lost access or became a victim of fraudulent actions
If the ATO approves the capital loss claim, the loss can be used to offset other capital gains you have in the same tax year.
How to reduce your capital gains
There are several ways to minimize the taxable gains and total tax liability for Australian taxpayers. However, the first thing to consider is whether you are considered to own cryptocurrency as an investment or if you are carrying on a business. Let’s start by looking at how to deduct losses from cryptocurrency.
Deduct cryptocurrency losses
As already mentioned earlier, if you own cryptocurrency simply for investment purposes, you will have to pay Capital Gains Tax when you dispose of the assets later. You can use any capital losses to offset your capital gains. This means that if you have invested in a cryptocurrency that has depreciated in value, selling all your coins will trigger a capital loss that can be used to reduce your total capital gains realized from other disposed assets.
You can also use any capital losses to offset capital gains in the future, but losses must be used at the first opportunity. Keep in mind that you are not allowed to deduct the loss from your other taxable income such as ordinary salary.
If you are considered to be carrying on a business in the eyes of the ATO, all your profits and income from cryptocurrency will be considered as part of your total assessable income. This means that any losses can also be used to offset other income during the same tax year.
Keep in mind that the Non-commercial loss rule needs to be taken into account if you need to offset or defer your loss.
Capital Gains Tax (CGT) discount
If you are a patient investor, we have some good news for you! If you are an Australian taxpayer and hold the investment for 12 months or longer, you are allowed to reduce your tax burden by taking advantage of what is called the CGT discount.
There are three criteria you need to pass in order to be eligible for the discount:
- You are an individual, trust or complying super fund
- You acquired the cryptocurrency at least 12 months before disposing of it
- You did not choose to use the indexation method
You will need to document the actual holding time for each disposal you make, so it is important to keep track of all your transactions on different exchanges at all times. The following discount rates apply if you can take advantage of the CGT discount rule:
- 50% for individuals and trusts
- 33.33% for complying super funds and eligible life insurance companies
- No CGT discount applies to foreign resident individuals after May 8, 2020
It is important to note that you can only reduce the capital gain after deducting all capital losses first. More detailed information about the discount method can be found on ATO’s website.
Crypto tax software and CGT discount
If you want to take advantage of the CGT discount, the best option is to use a cryptocurrency tax calculator to do all the calculations for you. Coinpanda is one of the most popular crypto tax solutions in Australia and provides a fully ATO-compliant tax report that breaks down all capital gains transactions including the CGT discount.
Sign up for a 100% free account today!
Trading fees
Most exchanges charge trading fees when you buy, sell, or trade cryptocurrency. Trading fees are considered deductible costs that can be deducted from the sales proceeds amount.
If you have a large number of transactions, deducting the trading fees can make a significant impact on your total tax liability. Most crypto tax solutions like Coinpanda do this automatically for you.
Lost and stolen cryptocurrencies
You might be entitled to a capital loss if you no longer have access to your crypto assets due to losing access to your private keys or becoming a victim of fraudulent actions. See the Taxes on lost or stolen crypto section for more on this topic.
Cryptocurrency personal use asset
In Australia, you might actually disregard some capital gains (and capital losses) from the disposal of cryptocurrencies under certain circumstances. If the cryptocurrency is considered to be a personal use asset, you can disregard capital gains for CGT purposes if the asset was acquired for less than $10,000.
A cryptocurrency is not considered a personal use asset if any of the following conditions are met:
- The cryptocurrency is held as an investment
- The cryptocurrency is used in a profit-making scheme, or
- The cryptocurrency is used in the course of carrying on a business
The most important thing to consider when deciding if an asset is a personal use asset or not is the time between acquiring the asset and spending it. Generally speaking, the longer you hold the cryptocurrency before actually spending or otherwise disposing of it, the less likely it will be considered a personal use asset from the ATO’s perspective.
You can read more about the treatment of cryptocurrency as personal use assets here.
How to calculate crypto taxes in Australia
Calculating and reporting your crypto taxes to the ATO can seem like a daunting task at first. Luckily, there are certain tools that can be used to make the process a lot simpler.
Calculating your crypto taxes manually
Here are the steps you must take to calculate your crypto taxes manually:
- Download the transaction history from all exchanges where you have bought, sold, received, or sent any cryptocurrency. This includes also transactions from or to your own wallets.
- Calculate the cost basis for every single transaction where cryptocurrency is disposed of
- Calculate the proceeds and resulting capital gains for all transactions that are considered taxable disposals by the ATO
- Identify all transactions subject to Income Tax in Australia
- Summarize all the calculations to find the total capital gains and your taxable income during the financial year
- Determine the holding period for all disposals and calculate the CGT discount if you want to take advantage of the capital gains discount applicable to Australian taxpayers
Calculating your crypto taxes using crypto tax software
The best option for most people in Australia is likely going to be using cryptocurrency tax software to automatically do the required calculations. If you want to save both time and money, here is how you can use Coinpanda to sort out your crypto tax situation and generate all the required tax reports automatically:
1. Sign up for a 100% free account
It is 100% free to create a Coinpanda account and you don’t need to enter any credit card information to get started. The free plan lets you explore and use all features for free.
Sign up with Coinpanda for free now!
2. Connect all your exchange accounts and wallets
Coinpanda supports more than 500+ exchanges, wallets, and blockchains today. You can easily import all your transactions by connecting your exchange accounts with API keys or by uploading a CSV file with the transaction history. If you find that Coinpanda does not support an exchange you have used, reach out to us so we can add the integration – usually within a few days.
3. Wait for Coinpanda to crunch all the numbers
Get yourself a cup of your favorite beverage and wait for Coinpanda’s sophisticated calculation engine to crunch all the numbers for you. Coinpanda will automatically calculate the cost basis, proceeds, capital gains, and taxable income for all your transactions! This might take anywhere from 20 seconds to 5 minutes depending on how many transactions you have.
4. Check for any reported warnings
Coinpanda will automatically display a warning if it appears that one or more transactions are missing such that the cost basis calculations will not include the total purchase price. If you see any warnings, you should first double-check that you have in fact connected all your wallets and exchange accounts.
Do you still see any warnings? Fear not! We have written an extensive list of help articles that will guide you through the entire process of making sure your crypto tax reports are as accurate as possible. If you still need any help, the best way to get in touch with our customer support and tax experts is through the Live Chat.
5. Download your tax reports and tax forms
When you have successfully imported all transactions, the final step is to download the tax reports you need to file your taxes to the ATO. Coinpanda’s tax plans start at $49 and you have lifetime access to all reports after upgrading.
Crypto tax deadline in Australia
The tax year in Australia runs from the 1st of July to the 30th of June the following year. If you are completing your tax return for 2021/2022, you need to file your taxes by the 31st of October, 2022. Remember that filing after the deadline can lead to penalties and fees.
Record-keeping of transactions
The ATO puts the responsibility of keeping records of all transactions on the taxpayer itself, whether you are holding cryptocurrency as an investment or carrying out a business. Many cryptocurrency exchanges keep these records for a limited time only, so you should make it a habit to periodically export and save this information.
The following records related to your crypto transactions should be kept:
- The date of the transactions
- The value of the cryptocurrency in Australian dollars at the time of the transaction
- What the transaction was for and who the other party was (such as an exchange or a wallet address)
It is vital to keep good records to make it easier to work out your capital gains and meet your tax obligations. Coinpanda’s tax product can create a capital gains report with all of this information for you.
How to file your crypto taxes to ATO
Once you have worked out your capital gains and income during the financial year, you have basically two options for filing your crypto taxes to the ATO:
- Online using myTax
- Using paper forms
The most common and preferred way is filing your taxes online using myTax. Coinpanda can generate a fully ATO-compliant tax report with all the information you need when filing your taxes using myTax. This includes also the CGT discount so that you can be sure you are not paying more taxes than you actually have to.
If you instead prefer to file your taxes using paper forms, you can download the 2021/2022 tax return for individuals here.
