In Australia, cryptocurrency is treated as property for tax purposes, and the disposal of crypto is subject to Capital Gains Tax (CGT). This applies to individuals, businesses, and investors who use or trade cryptocurrency.
Capital Gains Tax on Crypto in Australia
Table of Contents
When is Crypto Subject to Capital Gains Tax?
Event
CGT Applies?
Explanation
Selling cryptocurrency for fiat currency
Yes
CGT is calculated on the profit or loss from the sale.
Trading one cryptocurrency for another
Yes
Exchanging crypto triggers a CGT event, based on the value of the exchanged crypto.
Using crypto to purchase goods or services
Yes
The value of the crypto used is considered for CGT purposes.
Gifting cryptocurrency
Yes
CGT applies based on the market value at the time of the gift.
Receiving crypto as a gift
No
Receiving crypto as a gift is not a CGT event, but selling it later is subject to CGT.
Mining or staking rewards
No (Income Tax applies)
Rewards are taxed as ordinary income, not CGT.
Calculating CGT on Crypto
Determine the Cost Base: The cost base includes the purchase price, transaction fees, and any additional costs related to acquiring the crypto.
Calculate Capital Gain or Loss: Subtract the cost base from the sale price to determine the capital gain or loss.
Apply the CGT Discount:
If the crypto was held for 12 months or more, individuals may qualify for a 50% CGT discount on the gain.
Businesses and trusts are not eligible for this discount.
Example Calculation:
Details
Example
Purchase Price (Cost Base)
$10,000 (includes transaction fees)
Sale Price
$15,000
Capital Gain
$5,000
CGT Discount (if eligible)
$5,000 × 50% = $2,500
Taxable Amount
$2,500
CGT Exemptions for Crypto
Exemption
Details
Personal Use Asset
Crypto used for personal purchases (e.g., buying goods) is exempt if held for short periods.
Low-Value Transactions
If the cost of the crypto used for personal use is less than $10,000, CGT may not apply.
Losses
Capital losses can offset capital gains, reducing the taxable amount.
Record-Keeping for CGT
Record to Keep
Details
Transaction Details
Date of purchase and sale, amount, and value in AUD.
Cost Base Documentation
Receipts for purchases, transaction fees, and other acquisition costs.
Exchange Statements
Details of crypto-to-crypto trades, showing values at the time of exchange.
Tax Calculation Records
Evidence of how gains or losses were calculated.
Tax Reporting Obligations
Step
Action Required
Report Crypto Gains/Losses
Declare in the Capital Gains section of your annual tax return.
Include Crypto Income
Report mining or staking rewards under Income Tax.
Offsetting Losses
Deduct capital losses from gains before reporting.
Penalties for Non-Compliance
Issue
Potential Penalty
Failing to Report Crypto Gains
Fines and interest charges on unpaid taxes.
Underreporting Income
Additional audits and penalties, including repayment of unpaid taxes.
No Records Kept
Inability to substantiate claims may lead to higher taxes or fines.
Strategies to Minimize CGT on Crypto
Hold Crypto for Over 12 Months: Benefit from the 50% CGT discount for long-term holdings.
Harvest Capital Losses: Use losses from underperforming assets to offset gains from profitable trades.
Use Personal Use Exemptions: Ensure crypto is genuinely used for personal purchases to qualify for the exemption.
Tax Planning with Professionals: Consult with a tax advisor for tailored strategies and to ensure compliance with tax laws.
Capital Gains Tax on Crypto in Australia FAQs
Q: Do I need to pay tax on every crypto transaction? A: Tax applies only to taxable events like selling, trading, or using crypto for purchases.
Q: Is there a tax on holding cryptocurrency? A: No, holding crypto does not trigger any tax obligations.
Q: Can I offset crypto losses against other income? A: No, capital losses can only offset capital gains, not other forms of income.
Q: Are airdrops taxable? A: Yes, airdrops are considered taxable income at their market value when received.
Q: What happens if I don’t report my crypto transactions? A: Non-compliance may result in penalties, fines, or audits from the Australian Tax Office (ATO).
By understanding these rules and keeping accurate records, you can effectively manage your crypto tax obligations in Australia.
