You may acquire or dispose of crypto assets through gambling or by winning a prize.
The following amounts you receive are generally not considered as ordinary income:
- prizes won in ordinary lotteries, such as lotto draws and raffles
- prizes won in game shows, excluding regular appearance fees or game-show winnings.
For CGT purposes, don't include capital gains and capital losses you make directly from:
- winnings or losses from gambling
- a game or a competition with prizes.
If you win a crypto asset, you may subsequently hold it as an investment. If you dispose of it, your crypto investment may be subject to CGT. You are likely to make a capital gain or capital loss on the disposal.
The cost base of the crypto asset is its market value at the time you won it.
Example: crypto asset won in a lottery is held as investment
Anwar pays $100 for tickets in an online lottery where the prize is crypto assets. Anwar wins the lottery prize of $20,000 worth of crypto assets. The winnings from the prize are not ordinary income and any capital gain is disregarded.
Anwar's cost base for the crypto assets is $20,000.
Anwar holds onto the crypto assets for investment purposes, ultimately disposing of them 2 years later for $30,000. Anwar calculates a capital gain of $10,000 because of the disposal. As Anwar held the crypto assets for at least 12 months, he will be able to apply the CGT discount.
Assuming Anwar has no capital losses to apply, his net capital gain will be $5,000.End of example