Key points
- The ATO treats cryptocurrency as a CGT asset, not as money.
- Selling, swapping one coin for another, or spending crypto are all CGT events you have to report.
- Holding an asset for more than 12 months before disposal gives individuals a 50% CGT discount.
- Staking rewards and airdrops are ordinary income, taxed at their AUD value when you receive them.
- The ATO receives data from Australian exchanges and matches it against tax returns.
If you hold cryptocurrency, the problems rarely comes from the gain itself. It comes from not knowing that ordinary transactions are reportable, and from having no records when the ATO asks. The ATO classifies crypto as a capital gains tax asset, the same broad category as shares or an investment property. That single classification drives almost everything about how it’s taxed.
When a tax event happens
The moment that matters is disposal, and disposal is broader than most people expect. You trigger a CGT event when you:
- Sell crypto for Australian dollars. The most obvious one, and the one people remember.
- Swap one cryptocurrency for another. Trading Bitcoin for Ethereum is a disposal of the Bitcoin, taxed on its AUD value at the moment of the swap, even though no dollars changed hands.
- Spend crypto on goods or services. Buying something with crypto is a disposal at market value, and any gain since you acquired the coin is assessable.
- Gift it to someone. Giving crypto away is a disposal at market value, so a gain can be taxable even though you received nothing.
Simply buying and holding is not a tax event. Neither is moving coins between wallets you own. The gain or loss is only counted when you dispose of the asset, which is why timing the disposal is where the tax planning sits.
How the gain is taxed
A capital gain is the AUD value at disposal less what you paid to acquire the asset, including transaction fees. That gain is added to your income for the year and taxed at your marginal rate.
The 50% discount is the part worth planning around. An individual who holds a crypto asset for more than 12 months before disposing of it halves the taxable gain.
| Held before selling | Gain | Taxable amount | Reason |
|---|---|---|---|
| 10 months | $20,000 | $20,000 | No discount, held under 12 months |
| 13 months | $20,000 | $10,000 | 50% CGT discount applies |
The difference is real money. On a $20,000 gain, crossing the 12-month mark before selling can halve the amount that hits your tax return. It does not always pay to wait, because the price can move more than the tax saved, but the 12-month line is one of the few levers the rules hand you.
Trading is different from investing
Most individuals are investors: they buy crypto hoping it rises, and their disposals are assessable for CGT. Some people trade at a scale and frequency that the ATO treats as carrying on a business. For a trader, the coins are trading stock rather than CGT assets, gains are ordinary income, and the 50% discount does not apply. The distinction turns on volume, organisation, intention and how business-like the activity is. Getting it wrong in either direction is costly, and it’s one of the first things worth confirming with an accountant if your activity is heavy.
Income you might miss
Not everything is a capital gain. Some crypto arrives as ordinary income, taxable at its AUD value on the day you receive it:
- Staking rewards are income when they’re credited to you, at market value that day. That value also becomes their cost base for a later CGT calculation.
- Airdrops of established tokens are generally ordinary income on receipt.
- Getting paid in crypto for work or services is ordinary income, the same as being paid in dollars.
Each of these creates two events over time: income when received, then a capital gain or loss when you later dispose of the asset. Both have to be tracked.
Losses work in your favour, within limits
A capital loss on crypto is not wasted. It offsets capital gains in the same year, and any unused loss carries forward indefinitely to offset future gains. The limit is that a capital loss can only be applied against capital gains, not against your salary or other ordinary income. For anyone who has held through a volatile period, crystallising a loss deliberately can be a legitimate way to reduce the tax on a gain elsewhere, provided it’s a genuine disposal and not an artificial arrangement.
Records are vital
The ATO receives transaction data directly from Australian exchanges and matches it against what people report. A return that leaves crypto off is the return most likely to draw a review. The records to keep for every transaction are straightforward, but they have to be complete:
- The date of the transaction.
- The AUD value at the time, from a reputable source.
- What the transaction was for, and the other party’s wallet address or exchange record.
- Receipts for fees and any agent or accountant costs.
Exchanges close, wallets are lost, and reconstructing years of history after the fact is painful and expensive. Keeping the records as you go, or using portfolio software that exports a capital gains report, is far cheaper than rebuilding them under a deadline.
Where AGS fits in
Crypto rarely sits on its own. It connects to the rest of your tax position, your investment strategy, and sometimes your SMSF if the fund holds digital assets under its own strict rules. Our accounting team handles crypto reporting as part of the wider return rather than as an afterthought, so the gains, the income and the losses are all captured and the discount is claimed where it applies.
If you’ve been active in crypto and want the reporting handled properly, book a free initial discussion and we’ll work through what’s assessable and what records you’ll need.