Crypto Taxes in Australia: Ultimate Guide 2024
You’re looking into crypto taxes in Australia, and you need to understand how your investments are viewed by the Australian Taxation Office (ATO). The ATO classifies cryptocurrencies as property, which means they’re subject to capital gains tax when you sell or trade them.
But here’s the catch: your tax obligations vary depending on whether you’re an investor or a trader, and even the type of transaction you make.
You might qualify for a 50% discount on capital gains if you hold your crypto for over 12 months. But there’s more to evaluate, and that’s where things get interesting. After all, who doesn’t want to pay as little as possible in taxes while still being compliant?
Crypto taxes Australia: Key takeaways
Classification: The Australian Taxation Office (ATO) classifies cryptocurrencies as property and applies Capital Gains Tax (CGT) on gains from selling or trading.
Tax rates: Income tax rates apply to capital gains, with a 50% discount for cryptocurrencies held for over 12 months, and ordinary income tax applies to mining and staking earnings.
Record keeping: Always keep detailed records of all transactions for at least 5 years. This includes purchase and sale dates, fees, and fair market values.
Reporting: Capital gains are reported in Section 18 of Australian tax forms, with income from airdrops and staking reported as ordinary income.
Tax-free conditions: Buying and holding crypto, transfers between owned accounts, and receiving crypto as a gift incur no tax until disposal or sale, with some personal use exemptions.
How is crypto taxed in Australia?
In Australia, cryptocurrency taxation is a multifaceted issue that requires understanding the Australian Taxation Office's (ATO) guidelines. You need to recognize that the ATO classifies cryptocurrencies as property, which leads to the application of Capital Gains Tax (CGT) on gains realized from selling, trading, or using crypto for purchases.
When exploring how crypto is taxed in Australia, you should be aware that a 50% discount on capital gains tax applies to cryptocurrencies held for over 12 months. This translates to a reduced tax burden for long-term investors. If you hold onto assets, you minimize tax liabilities.
Also, income derived from activities such as mining and staking is subject to ordinary income tax. You must report this income alongside capital gains in your tax returns.
Keep detailed records of all cryptocurrency transactions, including gifting and swapping. This is important for accurate tax reporting and compliance with ATO regulations. This detailed record-keeping includes dates, amounts, and counterparties involved in each transaction.
Crypto tax Australia rates and brackets
To better traverse crypto tax in Australia, you really must understand the tax rates and brackets. You need to know how your total income affects the tax rate applied to your capital gains from cryptocurrencies.
In Australia, if your total income is up to A$18,200, you won’t pay any income tax on capital gains from cryptocurrencies. Beyond this threshold, your crypto tax rates align with your income tax brackets.
Income Range (A$)
Tax Rate
Up to 18,200
0% (tax-free threshold)
18,201 to 45,000
19% on income exceeding A$18,200
45,001 to 120,000
32.5% on income exceeding A$45,000
120,001 to 180,000
37% on income exceeding A$120,000
180,001 and above
45% on income exceeding A$180,000
These brackets apply to both ordinary income and short-term capital gains from cryptocurrency transactions.
Importantly, long-term capital gains (for assets held over 12 months) qualify for a 50% discount. This means you’ll pay tax on only half of the capital gain, which significantly reduces your tax liability.
Understanding these crypto tax rates and brackets will help you manage your tax obligations and potentially optimize your investment strategies.
Capital gains tax on crypto
When calculating CGT, you’ll need to keep detailed records of each transaction, including the acquisition cost, date of purchase, disposal date, transaction fees, and the fair market value at the time of disposal.
As mentioned, you get a 50% discount on capital gains if you hold crypto for more than a year. However, if you dispose of cryptocurrency (through selling or trading) within 12 months, any profit is treated as a short-term capital gain and taxed at your ordinary income tax rate.
Capital gains must be reported in your Annual Tax Return and will be taxed at your Income Tax rate, which varies based on your total income earned during the financial year.
Capital losses from crypto investments can only offset future capital gains and can’t be deducted against ordinary income.
Income tax on crypto earnings
Cryptocurrency earnings from activities like mining, staking, and receiving airdrops are subject to ordinary income tax in Australia. This means you must report these earnings on your tax return and pay income tax at your applicable rate. The fair market value of airdropped tokens at the time of receipt forms the cost basis for future capital gains calculations upon disposal.
When reporting crypto income, you’ll need to include it in Question 2 of your Australian tax form, adhering to the two-step tax process outlined by the ATO.
Unlike capital gains, which offer a discount for long-term holdings, income from cryptocurrencies doesn’t qualify for such reductions and is taxed at standard income rates.
Tax-free crypto transactions
These are some of the key tax-free crypto transactions:
Buying and holding crypto - Purchasing cryptocurrency with fiat currency (like AUD) doesn’t incur any taxes at the time of the transaction. You’re only taxed when you dispose of the crypto.
Transferring crypto between your own accounts - Transfers of cryptocurrency between accounts that you own are typically non-taxable events. However, you should maintain accurate records for future tax purposes.
Receiving crypto as a gift - Airdropped tokens can be considered tax-free unless sold.
Personal use assets may also be exempt from tax if cryptocurrencies are used for transactions valued under AUD 10,000 for personal consumption rather than investment.
Understanding these tax-free crypto transactions helps you navigate the complex landscape of cryptocurrency taxation in Australia and guarantees compliance with ATO regulations.
Crypto gifts and donations
Gifting cryptocurrencies involves specific tax considerations that both givers and recipients must understand. The ATO treats crypto gifts similarly to traditional gifts, meaning the sale value at gifting defines any potential taxable gains.
If you gift cryptocurrency, you’re not taxed immediately. However, you must keep records of the transaction.
As the recipient, your cost basis for the cryptocurrency is its market value at the time of receipt. If you sell the crypto later, any profit from the sale is subject to capital gains tax. Similar to if you’re a recipient, you should maintain accurate records of transaction dates and values to guarantee compliance with tax obligations.
Donations of cryptocurrency to registered charities are tax-free for the recipient, and as a donor, you can claim a deduction based on the crypto’s market value at the time of the donation.
Keep in mind that crypto gifts and donations have different tax implications.
For gifts, both parties must track the transaction details to report any future capital gains accurately. For donations, recipients don’t need to do this. If you need help with tracking your crypto transactions, we recommend you use dedicated crypto tax software.
Crypto mining and staking taxes
Earnings from crypto mining and staking are regarded as ordinary income and must be reported at their fair market value at the time of receipt, subject to income tax.
The ATO classifies mining and staking activities based on the profit motive. This means that those who do crypto mining and staking may be taxed differently if classified as a business.
Here are key points to keep in mind:
Taxable income: Reporting staking rewards and mining income is mandatory. Ignoring this is considered tax evasion, as the ATO takes non-compliance seriously.
Cost basis: Individuals receiving staking rewards have a cost basis established at the time of earning, which impacts future tax calculations when the tokens are sold or traded.
CGT implications: Capital gains or losses on the subsequent disposal of mined or staked cryptocurrencies are calculated similarly to other crypto transactions. You determine the gain by subtracting the cost base from the proceeds.
It may not be fun, but you’d do well to keep accurate records of all mining and staking transactions, including dates, amounts, and values. If your crypto tax situation is highly complex, you might benefit from the assistance of a crypto tax accountant.
Reporting crypto taxes to ATO
To accurately report your crypto taxes, you will need to calculate your capital gains or losses for each transaction. This involves subtracting the cost basis (the amount you originally paid for the crypto) from the proceeds (the total sales price) to determine your gain or loss.
Let’s put this in simple terms. Say you bought 1 ETH for $2000, and then sold it 4 months later for $2500. Your capital gain would be $500, because 2500 - 2000 = 2000.
The total capital gains for your crypto trades are reported in Section 18 of the Australian tax forms.
Key reporting requirements:
Reporting element
Details
Transaction records
Detailed records of each transaction, including date, amount, and type.
Capital gains calculation
Calculate gain or loss by subtracting cost basis from proceeds.
ATO form section
Report total capital gains in Section 18.
Income from airdrops/staking
Report as ordinary income in Question 2.
Precise record-keeping is not optional. Documents related to transactions are required to be retained for a minimum of five years to guarantee compliance verification.
Crypto trader VS investor
Being classified as a trader is very different from being classified as an investor.
When you’re classified as a trader, your profits are treated as ordinary income, and you must keep meticulous records under business tax regulations.
On the other hand, if you’re an investor, your crypto transactions are regarded as capital gains or losses, and you can declare these in your personal tax returns.
Here are key points to take into account:
Higher tax liabilities: As a trader, you may face higher tax liabilities since all trading profits are subject to standard income tax rates, unlike investors who can benefit from the 50% capital gains tax discount on assets held for over 12 months.
Business operations: Traders are characterized by high transaction volumes and a profit motive. This requires detailed record-keeping under business tax regulations.
Long-term VS short-term strategies: Investors primarily adopt a long-term holding strategy focused on capital appreciation over time, while traders frequently buy and sell, impacting their tax obligations.
The tax implications of crypto can have significant impacts on your financial decisions. That’s why it’s important to distinguish between being a trader and an investor.
DeFi and NFT taxes in Australia
ATO treats DeFi and NFT transactions as taxable events, subjecting them to capital gains tax (CGT) rules. If you’re involved in DeFi protocols or trading NFTs, you need to understand the tax implications.
Airdrops received through DeFi protocols are taxed as ordinary income at their fair market value when received. Any subsequent sale of these tokens is subject to capital gains tax, where the gain is calculated by subtracting the cost basis from the selling price.
Income derived from staking or providing liquidity in DeFi is also subject to ordinary income tax. You must report this income in your annual tax return as income received.
When selling NFTs, capital gains tax applies, with the gain calculated, as usual, by subtracting the cost basis from the selling price.
Record keeping is, surprise surprise, necessary for DeFi transactions and NFT trades. You must maintain detailed records of costs, dates, and counterparties for accurate tax reporting and compliance with ATO regulations.
Transferring crypto and fees
Here’s what you need to keep in mind in terms of crypto transfers and fees in the context of taxation:
Keep accurate records: Confirm you document all transfer transactions, including dates, amounts, and fees.
Transaction fees matter: Transaction fees paid during crypto transfers can be included in the cost base calculations, potentially reducing any capital gains realized upon later disposal.
Exchange fees count: Cryptocurrency exchanges may apply their own fees, which should also be documented for accurate reporting and to substantiate cost base deductions.
Optimizing crypto tax liability
Now let’s focus on strategies to minimize your tax liabilities and, basically, pay as little tax as possible while remaining compliant.
Optimizing crypto tax liability involves leveraging available deductions and discounts to reduce your taxable income.
You can considerably reduce your tax liabilities by utilizing the long-term capital gains tax discount of 50%, which applies if you hold your cryptocurrency for more than 12 months.
You can offset capital gains with capital losses from other investments, such as stocks or property.
Include transaction fees in the cost base of your cryptocurrency to lower the taxable capital gain upon disposal.
You can benefit from tax-loss selling strategies by selling losing positions before year-end to realize losses that can offset taxable gains.
Frequently asked questions
Is crypto taxed in Australia?
Yes, crypto is taxed in Australia. The Australian Taxation Office (ATO) classifies cryptocurrency as property, so it’s subject to Capital Gains Tax (CGT) when you sell, trade, or use it for purchases. Also, income earned from mining, staking, and airdrops is taxed as ordinary income.
How to calculate crypto tax in Australia?
To calculate crypto tax, subtract the cost basis (the amount you paid for the crypto) from the proceeds (the amount you received when selling or trading). If you’ve held the crypto for more than 12 months, you may apply a 50% discount to the capital gains. Always keep detailed records of all transactions.
How is crypto taxed in Australia?
Crypto in Australia is taxed under two main categories: capital gains tax for selling, trading, or using crypto and ordinary income tax for mining, staking, and airdrops. Capital gains tax applies when you sell crypto for a profit, with a potential 50% discount if held for over 12 months. Mining and staking earnings are taxed as regular income at the applicable income tax rate.
Can you claim crypto losses on taxes in Australia?
Yes, you can claim crypto losses in Australia. Capital losses from crypto can offset future capital gains, but they cannot be used to offset ordinary income. Keep detailed records of your losses to ensure you can claim them properly when filing your taxes.
How much tax do you pay on crypto in Australia?
The amount of tax you pay on crypto in Australia depends on your income level. Capital gains from crypto are taxed according to your income tax bracket, ranging from 0% for incomes up to A$18,200 to 45% for incomes above A$180,000. Long-term capital gains (for assets held over 12 months) are eligible for a 50% tax discount.
The bottom line
You’ll be better able to deal with crypto taxes in Australia by understanding the ATO’s classification of cryptocurrencies as property, not currency. Key obligations include paying capital gains tax on profits from selling or trading, and income tax on mining and staking rewards.
Holding assets for over 12 months allows a 50% discount on capital gains, while certain transactions like buying crypto with AUD remain tax-free.
As a general rule, keep accurate and detailed records of all transactions for at least five years. This helps guarantee compliance and simplifies identifying potential deductions and tax optimization strategies.
If you're also interested in how cryptocurrencies are taxed in other major economies, make sure to read our complete guide to crypto taxes.
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