Cryptocurrency and Digital Asset Tax in Australia
How the ATO taxes cryptocurrency: CGT on disposal, income tax on mining, staking and airdrops, DeFi and NFT treatment, the 50% discount for assets held over 12 months, ATO programs running since 2019, record-keeping obligations, and CARF reporting from January 2027.
The ATO treats cryptocurrency as property, not currency. Every disposal of a crypto asset is a CGT event under ITAA 1997 Parts 3-1 and 3-3, including selling for AUD, trading one crypto for another, using crypto to pay for goods, and gifting. Individuals who hold crypto for more than 12 months receive the 50% CGT discount under Division 115. Mining and staking rewards received as part of a business are assessable as ordinary income when received, not at the point of disposal.
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CGT on every disposal
Every disposal of a crypto asset triggers a CGT event under ITAA 1997 Parts 3-1 and 3-3. Disposals include selling for AUD or another fiat currency, trading one crypto for another, using crypto to pay for goods or services, gifting crypto, and converting crypto to an NFT or other digital token. Your cost base is what you paid in AUD at the time of acquisition, including exchange fees and transaction costs. Capital losses can be offset against capital gains in the same year or carried forward indefinitely, but cannot be offset against ordinary income.
The 50% CGT discount
Individuals who hold a crypto asset for more than 12 months before disposal receive the standard 50% CGT discount under Division 115 of ITAA 1997. Only half the net capital gain is included in assessable income and taxed at the individual's marginal rate. The discount does not apply to companies. Complying superannuation funds receive a 33.33% discount instead.
Crypto trading as a business vs investing
If you carry on a business of trading crypto, profits are assessable as ordinary business income under Division 6 of ITAA 1936, not as capital gains. This means no 50% CGT discount, but losses can be offset against other income (subject to non-commercial loss rules in Division 35 of ITAA 1997 for individuals). The ATO assesses business status by examining volume and frequency of transactions, sophistication and organisation, intention to profit from short-term price movements, whether you have a business plan, and scale of capital employed.
Getting paid in cryptocurrency
If you receive cryptocurrency as payment for goods or services in your business, the AUD value of the crypto at the time you receive it is assessable business income, exactly as if you received AUD. That AUD value also becomes your cost base for any future CGT event when you later dispose of the crypto. You report the AUD value as business income in your tax return for the year you receive it. If you are GST-registered, you still charge GST on the underlying supply based on the AUD value; accepting crypto as payment does not change the GST position.
Mining and staking
Mining and staking rewards are taxed differently depending on whether the activity constitutes a business or a hobby.
Mining as a business
If you mine crypto using dedicated hardware with an intention to profit and regularity of activity, the AUD value of crypto received through mining is assessable as business income when you receive it. You can deduct associated business expenses: electricity, hardware depreciation (under ITAA 1997 Division 40), internet costs, and cooling. That income value becomes your cost base for future CGT events on disposal of the mined crypto.
Mining as a hobby
If you mine as a hobby (small scale, no business intention), the crypto is not assessable when received. However, you may still trigger CGT when you later dispose of it, with a cost base of nil or the AUD value at receipt depending on the circumstances. You cannot deduct mining costs against other income if the activity is a hobby.
Staking rewards
Staking rewards are generally treated as ordinary income at the AUD market value when you receive them. This applies regardless of whether staking is a business or investment activity. The received value becomes your cost base for future CGT events.
DeFi, NFTs and airdrops
Decentralised finance, non-fungible tokens and airdrops each carry specific tax consequences that the ATO is increasingly scrutinising.
DeFi protocols
Interest, fees and rewards earned through DeFi lending, liquidity pools and yield farming are generally assessable as ordinary income when received. Moving crypto into and out of DeFi protocols may trigger CGT events if there is a change in beneficial ownership or a disposal. The ATO looks at substance over form: if a DeFi transaction results in you giving up economic ownership of one asset and receiving another, it is a disposal.
NFTs
Creating and selling NFTs as a business: proceeds are business income. Buying and selling NFTs as an investment: CGT applies on disposal. NFTs used as digital collectibles for personal use may qualify for the personal use asset exemption if acquired for less than $10,000 under ITAA 1997 s 108-20(2), but the ATO takes a narrow view of 'personal use' for digital assets. If the NFT was acquired as an investment or held with a view to profit, the exemption does not apply.
Airdrops
Airdrops received in connection with an existing holding or activity are generally assessable as ordinary income at AUD market value when received. The cost base for future CGT events is the AUD value at receipt. Unsolicited airdrops with no connection to existing holdings may have a nil cost base until the ATO issues further guidance.
GST treatment of crypto
Buying and selling crypto is not subject to GST for most individuals. Crypto is treated as neither goods nor a standard financial supply for GST purposes. Using crypto to pay for business expenses does not change the GST treatment of the underlying supply. If you accept crypto as payment for taxable supplies and are GST-registered, you still charge GST on the supply based on the AUD value. The fact that payment arrives in crypto does not alter the GST position on the underlying sale.
ATO data matching and compliance
The ATO has been running crypto programs since 2019, obtaining transaction data from Australian exchanges. Pre-fill data from exchanges is increasingly appearing in myTax returns. The ATO sends 'nudge' letters to taxpayers who have transacted on exchanges but have not reported crypto gains or income. Deliberate non-reporting is treated as tax evasion, attracting penalties up to 75% of the tax shortfall plus the General Interest Charge.
Expanded reporting from January 2027
From 1 January 2027, crypto asset reporting to the ATO expands significantly under the Crypto-Asset Reporting Framework (CARF). Australian exchanges will be required to report detailed transaction data, similar to the sharing economy reporting regime (SERR). This will substantially close remaining gaps in the ATO's visibility of crypto holdings and disposals.
Record-keeping obligations
The ATO expects detailed records for every crypto transaction: the date, the crypto asset involved and quantity, the AUD value at the time, the purpose of the transaction (purchase, sale, trade, payment, mining reward, staking reward, airdrop, gift), exchange records showing deposits, withdrawals and fees, wallet addresses used, and cost base calculations. Records must be retained for at least five years after the relevant CGT event or income year.
Statute references
- ITAA 1997 Parts 3-1 and 3-3 (CGT provisions, cost base, CGT events)
- ITAA 1997 Division 115 (50% CGT discount for individuals)
- ITAA 1997 s 108-20(2) (Personal use asset exemption, threshold $10,000)
- ITAA 1997 Division 35 (Non-commercial loss rules)
- ITAA 1997 Division 40 (Capital allowances, depreciating assets)
- ATO Crypto asset investments guidance
- Crypto-Asset Reporting Framework (CARF), effective 1 January 2027
Frequently asked questions
Is swapping one cryptocurrency for another a taxable event?+
How are staking rewards taxed in Australia?+
What records does the ATO expect for crypto transactions?+
Can I claim crypto losses against my salary or business income?+
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