Disclaimer
You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of private advice

Authorisation Number: 1052355290389

Date of advice: 25 February 2025

Ruling

Subject: CGT - cryptocurrency

Question 1

Is the staking and un-staking of Ethereum on the platform constitute a disposal event under section 104-10 of the Income Tax Assessment Act 1997?

Answer 1

No.

The platform provided incentives to stake your assets which assists them with maintaining their online platform. The platform agreement specifies your assets will remain with you as the owner through the staking process. At no time does the platform become the legal or title owner of your asset.

As you remain the legal and title owner throughout the staking process this will not trigger a disposal event under section 104-10 of the ITAA 1997.

This ruling applies for the following period:

DD MM YY

The scheme commenced on:

DD MM YY

Relevant facts and circumstances

On the specified date, you commenced a stake period with platform, with a stake amount of XX Ethereum (ETH) with a monetary value of $XXXX. You have no commitment period or maturing date. This can be added or removed as you please.

This is a personal investment and is not in the furtherance of a business.

You store your financial data through an online platform.

Platform explanation of staking

•                     Staking is a way to earn rewards by putting your crypto to work on a blockchain network. In return for helping the network run smoothly and securely, you receive more of the cryptocurrency you're staking.

Platform user agreement

Ownership during staking:

•                     Title to supported digital assets shall at all times remain with the owner and shall not transfer to platform.

•                     All interests in digital assets they hold for digital asset wallets are held for customers, are not property of platform, and are not subject to claims of Coinbase's creditors.

•                     Platform does not take ownership of your assets during staking.

Staking services

•                     This instruction to stake your digital assets does not affect the ownership of your digital assets in any way.

•                     Staking does not transfer ownership of your ETH to platform or any third party.

Digital Asset Custody and Title

•                     All Supported Digital Assets held in your Digital Asset Wallet are custodial assets held by platform for your benefit.

Control and Customer Instructions

•                     You control the Digital Assets held in your Digital Asset Wallet.

•                     You can instruct platform to unstake your ETH at any time, and platform will comply with your instructions, subject to protocol requirements and unstaking periods.

Staking services

•                     If you stake your assets with platform, or one of its affiliates, they will facilitate the staking of those assets on your behalf by acting as a transaction validator on the applicable network for the supported Digital Asset you stake.

•                     Platform acts as a validator on your behalf, but the staked ETH remains your property.

Protocol lockups and Unstaking

•                     You will need to request for your staked assets to be unstaked before they can be sold or transferred.

•                     This means your ETH may be temporarily illiquid during staking, but ownership is not transferred.

Slashing

•                     You will need to request for your staked assets to be unstaked before they can be sold or transferred.

•                     This means your ETH may be temporarily illiquid during staking, but ownership is not transferred.

No guarantee of rewards

•                     You have no right to a reward until it is received by platform.

•                     While you may earn staking rewards, these are not guaranteed and depend on network conditions.

On the specified date, you removed some of the ETH, from the un-staking process. The estimated withdrawal time and cooling off period is X weeks.

You contend to remove the remaining ETH from the un-staking process in the future.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 104-10

Further issues for you to consider

We have limited our private ruling to the questions raised in your application. There may be related issues that you should consider, including:

As a forger who creates a new block, you'll usually receive a reward in the form of additional tokens from holding the original tokens. The money value of additional tokens is ordinary income at the time you receive the tokens. You need to declare the income in your tax return as other income.

Refer to www.ato.gov.au and search "QC 69950" for more information.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).