Tax and crypto asset investments

Read this page or download the fact sheet Tax and crypto asset investments (NAT 75362, PDF, 253KB)This link will download a file.

Tax and crypto assets

How you interact with crypto assets determines if you:

• need to report income or a capital gain or loss
• can claim a deduction.

If you exchange crypto assets for goods, cash, or other crypto assets then it's likely a disposal for the purposes of capital gains tax (CGT) and you may need to include a capital gain or loss in your tax return.

Keeping good records

It’s important to keep good records of each crypto asset and every transaction. Crypto exchanges can close or accounts can be lost. Regularly export your transaction history to avoid missing records at tax time.

You can find out more about the records you need to keep and how long to keep them at Keeping crypto records.

Table: Records you need to keep when you buy, hold or sell an investment

Buying (acquiring)	Owning (holding)	Selling (disposing)
Keep: receipts of your transactions when you buy crypto assets documents that show the type of transaction, the date and time of transaction, the purchase price (in Australian dollars), and what the transaction was for commission or brokerage fees on the purchase agent, accountant, and legal costs exchange records.	Keep: software costs related to managing your tax affairs digital wallet records and keys documents showing the date and quantity of crypto assets received via staking or airdrop.	Keep: receipts of your transactions when you sell or transfer documents that show the type of transaction, the date and time of transaction, the sale or transfer price (in Australian dollars), and what the transaction was for commission or brokerage fees on the sale or transfer exchange records calculation of capital gain or loss.

When capital gains tax applies

The most common use of crypto is as an investment, in which case the crypto asset is a capital gains tax (CGT) asset.

If you acquire a crypto asset as an investment, transactions such as disposal or exchange or swap are a CGT event, and you may make a:

• capital gain
• capital loss, which can reduce other capital gains you make.

You will make a capital gain if the proceeds from the disposal of your crypto asset is more than its cost base. If you make a capital gain, it is taxable.

You may be able to reduce capital gains using the CGT discount if you hold your crypto asset for at least 12 months.

If you hold the crypto asset as an investment, it will not be exempt from CGT as a personal use asset.

To work out if you made a capital gain or capital loss from each CGT event, keep records for each crypto asset and your transactions.

When assessable income arises from crypto transactions

You must declare the rewards you receive from staking crypto assets. These are often in the form of additional tokens from holding the original tokens.

You'll need to:

• convert the value of your crypto assets to Australian dollars
• report them in your tax return at 'Other income'.

Some crypto projects 'airdrop' new tokens to existing token holders as a way of increasing the supply of tokens. The money value of established tokens you receive by airdrop is income at the time you receive them. You'll also need to convert these amounts into Australian dollars and declare them as 'Other income'.

For instructions on how to complete 'Other income' in your tax return, see Lodgment options for preparing your tax return.

When to report capital gains and losses

You must report 'disposals' of crypto assets for CGT purposes if you:

• exchange one crypto asset for another crypto asset, including activities like depositing your crypto assets into liquidity pools and wrapping
• trade, sell or gift crypto assets
• convert crypto assets to a fiat currency – for example, to Australian dollars.

Transaction fees paid in fiat currency can be included in the cost base of the crypto asset you disposed of. However, if your crypto holding reduces during a transfer due to using crypto to cover the fee, the transaction fee is also a disposal and has CGT consequences.

You have a CGT obligation even if you:

• use the proceeds from selling crypto assets to buy more crypto assets
• don’t convert the proceeds into fiat currency – for example, Australian dollars.

If you transfer crypto assets from one wallet to another wallet while maintaining ownership of it, it’s not a disposal for tax purposes and doesn’t need to be reported.

Where to report capital gains and losses

Include any capital gains or capital losses of crypto assets at the CGT labels on your tax return

• if you made a capital gain, report it at Total current year capital gains and Net capital gains
• if you made a capital loss, report it at Net capital losses carried forward to later income years
• if you’re reporting over $10,000 in capital gains and completing the CGT schedule with your tax return, report capital gains and losses at Other CGT assets and any other CGT events.

You can work out your CGT using our CGT calculator and record keeping tool. Alternatively, you can find a reputable Australian crypto assets tax calculator to sync your exchange and wallet accounts to assist in calculating your CGT.

For a step-by-step on how to report CGT from crypto assets in your tax return, you can watch our video, How to work out and report CGT on crypto.

Personal use assets

Crypto assets are usually considered an investment and not a personal use item.

Even if you use your crypto asset investments to buy personal items, this won’t change it from being an investment. This includes exchanging crypto assets for Australian dollars or gift cards or using an online payment gateway to buy personal items.

However, when you get a crypto asset and use it in a short period of time to buy personal items, it could be a personal use asset.

A capital gain on the disposal of a crypto asset is exempt if:

• the crypto asset is a personal use asset that’s mainly kept or used to purchase personal items
• you got your personal use crypto asset for less than $10,000.

 

For more information about personal use assets, see Crypto asset as a personal use asset.

Calculate CGT correctly

If your crypto assets are held as an investment, you may pay tax on your net capital gains for the year.

To calculate your CGT use your total capital gain, subtract:

• any capital losses
• your entitlement to any CGT discount on your capital gain.

Note: Before calculating your capital gain or loss, convert your crypto purchases and disposals into Australian dollars (A$).

When you purchase crypto assets in a fiat currency and transfer the crypto assets for another, the amount of the original purchase in the fiat currency forms part of your cost base.

 

If you acquire crypto by exchanging it for other crypto, the cost base of the original crypto you disposed of in the exchange is the market value in A$ at the time it was acquired.

 

Capital losses

If you dispose of your crypto assets for less than it cost you, you may have a capital loss. Capital losses can be used to reduce your capital gains in the current or future income years.

Make sure you report the loss in your tax return so you have it available to offset future capital gains. For more information, see How to work out and report CGT on crypto.

This is a general summary only.

For more information, see:

• Crypto asset investments
• Capital gains tax.