*Disclaimer: This page is for general information purposes only and should not be used as a substitute for consultation with tax professionals. The general tax guidance on the Australian Taxation Office (ATO) does not address all the various cryptocurrency transactions and resulting tax implications. Guidance from the ATO may be supported or challenged by the Australian courts.

Is cryptocurrency taxable?

Cryptocurrency is treated as property for Australian tax purposes. The taxable events of crypto transactions are treated as either capital gain/loss or ordinary income, depending on the type of transactions the users have done. In general, users need to report a transaction on their Australian individual income tax return when they dispose of cryptocurrency. On the website of ATO, disposition of cryptocurrency means as follows:

  • Sell or gift cryptocurrency

  • Trade or exchange cryptocurrency (including the disposal of one cryptocurrency for another cryptocurrency)

  • Convert cryptocurrency to fiat currency (a currency established by government regulation or law ), such as Australian dollars, or

  • Use cryptocurrency to obtain goods or services.

How is my cryptocurrency taxed?

If you are a typical crypto investor, who treats trading cryptocurrency as a capital asset, your taxable income will be calculated by using the proceeds less the total cost basis (including selling transaction fee) of the crypto. ATO gives a 50% discount on the capital gain if you hold the coins more or equal to 12 months before disposal, Any income from the disposition is considered as capital gain, which is subject to tax.

Crypto.com Tax supports users who are engaging in cryptocurrency transactions for investment purposes only. Users participating in cryptocurrency transactions that constitute "business activities" cannot apply these calculations for the Australian income tax reporting such as transacting cryptos in trading stock accounts. Therefore, this may not be the right tool for you if your crypto transactions constitute business activities as opposed to hobby transactions. In addition, Crypto.com Tax’s tax calculations provide the outcomes under the capital account treatment only. If you transact cryptos in a revenue account, you may convert all the capital gains to ordinary income. However, we strongly advise you to consult with your tax agent before doing so. Please refer to our tax disclaimer for more references.

Cryptocurrency tax deadline

Taxable cryptocurrency transactions need to be reported on your Income Tax return for individuals (form NAT 2541). The income tax filing deadline is the end of October every year if you lodge the tax return by yourself. The deadline would be 15 May if you lodge the tax return with a tax agent.

How do I file crypto tax reports?

Crypto.com Tax is a user-friendly tax product to generate tax reports for tax filing. Please follow the below steps to finish the crypto tax filing.

  • Register your account in Crypto.com Tax

  • Import your transactions in our product in 5 ways:

  • Generate the below tax reports on the page of Tax Reports:

    • Capital gain/loss CSV file, including the amount of capital gain/loss and any discount for completing the capital gains tax schedule - NAT 3423

    • Transaction history CSV file for keeping the books and records

  • After completing the capital gains tax schedule, users can attach it with the individual tax return (NAT 2541) for completing the tax filing

Tax Rules on Crypto Transactions

Buying cryptocurrency (e.g. AUD → BTC)

Buying cryptocurrency is not considered a taxable event. However, it’s extremely important to keep track of the acquisition cost (with associated fees), as it becomes the cost basis of the cryptocurrency and will be used for calculating capital gains/losses for subsequent taxable events (i.e. dispositions, etc.)

Selling cryptocurrency (e.g. ETH → AUD)

Selling cryptocurrency for fiat currency is considered a taxable event. The capital gains/losses can be calculated by subtracting the cost basis and the associated fees from the proceeds.

If the holding period of the coins equals or more than12 months before the disposal, users will have a 50% discount from the capital gain. On the other hand, users do not get the discount if they hold the cryptos less than 12 months before the disposal.

Example:

  • Buy 10 ETH for AUD 10,000 on 1 Feb 2020

  • Sell 5 ETH for AUD 10,000 on 2 Feb 2021

Results:

  • Cost basis per coin: AUD 10,000/10 = AUD 1,000 per ETH

  • Proceeds: AUD 10,000

  • Total cost basis for 5 ETH: AUD 1,000 * 5 = AUD 5,000

  • Capital gain/loss: AUD 10,000 - 5,000 = AUD 5,000

  • Capital gain after discount: AUD 5,000 / 2 = AUD 2,500

Trading one cryptocurrency for another (eg. ETH → BTC)

Selling cryptocurrency for another cryptocurrency is considered a taxable event. The capital gains/losses can be calculated by subtracting the cost basis from the FMV (fair market value) of the coins you receive.

Example:

  • Buy 10 ETH for AUD 10,000

  • Sell 5 ETH for 1 BTC (FMV per BTC is AUD 12,000)

Results:

  • Cost basis per coin: AUD 10,000/10 = AUD 1,000 per ETH

  • Proceeds: AUD 12,000

  • Total cost basis for 5 ETH: AUD 1,000 * 5 = AUD 5,000

  • Capital gain/loss: AUD 12,000 - 5,000 = AUD 7,000

Sending cryptocurrency to others

Payment

Paying cryptocurrency for services and goods is considered a taxable event. It becomes non-taxable when personal use asset exemption applies. (See details in “Other Tax Rule”) The capital gains/losses can be calculated by subtracting the cost basis from the FMV (fair market value) of the coins you send.

Example

  • Buy 10 ETH for USD 10,000

  • Send 5 ETH for some service (FMV per ETH is 2,000)

Results:

  • Cost basis per coin: USD 10,000/10 = USD 1,000 per ETH

  • Proceeds: USD 2,000 * 5 = USD 10,000

  • Total cost basis for 5 ETH: USD 1,000 * 5 = USD 5,000

  • Capital gain/loss: USD 10,000 - 5,000 = USD 5,000

Gift

Sending a gift is similar to disposing of the coins which are subject to capital gains/losses. It is calculated by subtracting the cost basis of the coin from the FMV of the cryptocurrency on the date of gifting.

When the cryptocurrency is ultimately sold by the recipient of the gift, the proceeds of disposition are the FMV on this date.

Example:

  • Buy 10 ETH for AUD 10,000

  • Send 5 ETH to friends as a gift (FMV per ETH is AUD 2,000)

Results:

  • Cost basis per coin: AUD 10,000/10 = AUD 1,000 per ETH

  • Proceeds: AUD 2,000 * 5 = AUD 10,000

  • Total cost basis for 5 ETH: AUD 1,000 * 5 = AUD 5,000

  • Capital gain/loss: AUD 10,000 - 5,000 = AUD 5,000

Donations

Donation is also similar to disposing of coins that are subject to capital gains/losses. If the payment is made directly to a not-for-profit organization that has “Deductible Gift Recipient Status” (DGR), it can be tax-deductible. However, only a small number of Australian entities are DGRs. You can check here to see if the entity has a DGR endorsement. In addition, it is required to keep the receipt issued by the DGR. You can also claim the deduction by using other records such as bank statements. Please refer to this webpage for more information.

Example:

  • Buy 1 BTC for AUD 10,000

  • Donate 1 BTC worth AUD 20,000 to a charity that has DGR

Results:

  • Capital gain/loss: AUD 20,000 - AUD 10,000 = AUD 10,000

  • AUD 20,000 will be tax-deductible

Receiving cryptocurrency other than direct purchase or transfer

Both receiving cryptocurrency and its subsequent disposal are considered taxable events except receiving the crypto as mining, gift, rebate, and forks that are only taxable upon disposal. This will apply to multiple cases, including airdrops, payment (e.g. employment income), and receiving rewards (e.g. staking rewards or referral bonus). These receiving types of crypto transactions will be taxable as ordinary income at FMV. The income should be reported on the Income session of form NAT 2541. Also, they will be subject to capital gains/losses at future dispositions. The gain/loss is calculated by subtracting the cost basis from the FMV of the cryptocurrency on the date of disposition.

Mining

In general, the mining income is not taxable at the time of receipt. However, it is subject to capital gains/losses at dispositions. The gain/loss is calculated by subtracting the zero-cost basis from the FMV of the cryptocurrency on the date of disposition.

If the cryptocurrency is considered to be a capital asset and held in a capital account e.g.mining as a hobby then-current expenses such as start-up cost and home office expenses cannot be taken as a deduction to the resulting capital gain/loss. Those mining expenses can only be deducted when the cryptocurrency is held on the revenue account.

Example:

  • Receive 10 ETH from mining (FMV per ETH is AUD 10,000)

  • Sell 1 ETH for AUD 12,000

Results:

  • Cost basis per coin: 10,000 per ETH

  • Proceeds: AUD 12,000

  • Total cost basis for 1 ETH: 10,000

  • Capital gain/loss: AUD 2,000

Forks

Fork takes place when there is a split on the new cryptocurrency that you currently hold. Similar to mining, the new coins you received from the hard fork have a 0 cost basis and are subject to capital gains/losses when you dispose of them. The calculation of capital gains/losses is the same as mining. For more scenario cases, please refer to the section of Chain Split on the ATO website.

Airdrops

Airdrops are basically some free coins you received from a marketing campaign or event.

In general, coins from airdrops are taxable at the time of receipt. Unlike mining, users will have ordinary income equal to the FMV of the new cryptocurrency when it is received. Also, they are subject to capital gains/losses at dispositions. The cost basis of the received coins is equal to the FMV at the time of receipt. The calculation of capital gains/losses is the same as mining.

Rewards

You can get crypto rewards in several ways, including but not limited to:

  • Stake/Earn rewards and bonus

  • Referral bonus

In general, the reward income is taxable at the time of receipt. Unlike mining, users will have ordinary income equal to the FMV of the new cryptocurrency when it is received. Also, they are subject to capital gains/losses at dispositions. The cost basis of the received coins is equal to the FMV at the time of receipt. The calculation of capital gains/losses is the same as mining.

Gift

The received coins from the gift are not taxable at the time of receipt. However, they are subject to capital gains/losses at dispositions. The calculation of capital gains/losses is the same as mining.

Example:

  • Receive 10 ETH from friends as a gift (FMV per ETH is AUD 1,000)

  • Sell 5 ETH for 1 BTC (FMV per BTC is AUD 12,000)

Results:

  • Proceeds: AUD 12,000

  • Cost basis = FMV at the date of receiving the gift

  • Total cost basis for 5 ETH: AUD 1,000 * 5 = AUD 5,000

  • Capital gain/loss: AUD 7,000

Payment (Salary)

If the cryptocurrency received is a payment to you as a performance of services, it may be considered as your salary. The FMV of the received coins becomes taxable employment income of that year and should be reported on Individual Income tax return NAT 2541. Received coins from wages may be also subject to income tax withholding. See Schedule 1 – Statement of formulas for calculating amounts to be withheld for further details.

Each individual is responsible for calculating and reporting income on their individual tax return even if a payor has not supplied appropriate documentation. The FMV of the cryptocurrency received as salary will be the cost basis for future disposition.

Example:

  • Receive 10 ETH as salary (FMV per ETH is AUD 1,000)

  • Sell 5 ETH for 1 BTC (FMV per BTC is AUD 12,000)

Results:

  • Proceeds: AUD 12,000

  • Total cost basis for 5 ETH: AUD 1,000 * 5 = AUD 5,000

  • Capital gain/loss: AUD 7,000

  • AUD 10,000 should be reported as income from wages/salaries at the time of receipt

Rebate

In general, you can only get rebates from credit cards and staking. The cost basis of the rebates is equal to the FMV at the time of receipt, which is the same as receiving the gift.

The received coin/token from rebates is not taxable at the time of receipt. However, they are subject to capital gains/losses at dispositions. The cost basis of the received coin/token is equal to the FMV at the time of receipt. The calculation of capital gains/losses is the same as mining.

Example:

  • Receive 0.1 ETH from rebates (FMV per ETH is USD 10,000)

  • Sell 0.1 ETH for USD 1,200

Results:

  • Cost basis per coin: 10,000 per ETH

  • Proceeds: USD 1,200

  • Total cost basis for 0.1 ETH: 1,000

  • Capital gain/loss: USD 200

Previously, rebate transactions were mapped to Receive - Gift. To increase the accuracy of your tax reporting, we have moved the historical Crypto.com App ‘card_cashback’, ‘referral_card_cashback’, ‘reimbursement’, and ‘lockup_swap_rebate’ transactions from the ‘Receive-Gift’ to the ‘Receive-Rebate’ category on the transactions page on Friday, 22 October 2021.

This change may affect your ‘Receive-Gift’ cost basis only if you are an existing US Crypto.com Tax user. No tax impact if you are an Australian user.

Transferring cryptocurrency between your own accounts

Transferring cryptocurrency between your own accounts is generally not considered a taxable event when the associated fee is in fiat. However, a portion of the transaction may be taxable if the associated fee is in cryptocurrency as there will be a difference between the FMV of the cryptocurrency disposed to settle the fee versus its adjusted cost basis. See additional information on fees below.

Swapping a cryptocurrency to another one

Token migration means whenever an old coin swaps with a new coin e.g. MCO converting to CRO. It is generally considered a taxable event which is similar to trading cryptocurrency for another cryptocurrency for Australian tax purposes. The associated fee that is in cryptocurrency will also be taxable as there will be a difference between the FMV of the cryptocurrency disposed to settle the fee versus its adjusted cost basis. See additional information on fees below.

Example:

  • Buy 10 MCO for AUD 50

  • Swap 5 MCO to 20 CRO (FMV per CRO is AUD 20)

Results:

  • Cost basis per coin: AUD 50/10 = AUD 5 per MCO

  • Proceeds: AUD 400

  • Total cost basis for 5 MCO: AUD 5 * 5 = AUD 25

  • Capital gain/loss: AUD 400 - 25 = AUD 375

Cost

Users may incur expenses when the blockchain transaction is approved/failed/canceled. For example, a gas fee is charged due to a failed blockchain transaction. We call this type of transaction Cost. It can be subject to capital gains/losses. The capital gains/losses can be calculated by subtracting the cost basis from the FMV of the coins charged. The FMV of the coins should not be considered as an investment expense that is not tax-deductible for Australian tax purposes.

Example:

  • Buy 2 ETH for AUD 2000

  • 0.1 ETH is charged due to a failed blockchain transaction (FMV per ETH is AUD 1,500)

Results:

  • Cost basis per coin: AUD 2,000/2 = AUD 1,000

  • Proceeds: AUD 1,500 * 0.1 = AUD 150

  • Total cost basis for 0.1 ETH: AUD 1,000 * 0.1 = AUD 100

  • Capital gain/loss: AUD 150 - 100 = AUD 50

Margin trading

Margin trading of cryptocurrency involves capital gain/loss including the below cases:

  • Closing the position

  • Payment of interest by cryptocurrency

  • The forced sale of your collateral by exchanges

Crypto.com Tax does not support margin trading transactions at this moment. Please consult your tax advisor if you’re actively involved in margin trading.

Other Tax Rules

Fee treatment

Fees can show up in all kinds of cryptocurrency transactions and are often the most cryptic part when calculating taxes. To understand the fee treatment thoroughly, we need to consider the following two cases.

Fee in nontaxable events (e.g. buy)

Typically in a nontaxable event, the FMV of the fee will be added to the cost basis of the resulting coins. The idea is simple - the fees you pay are saved for your future benefits, as they will be considered as part of the cost basis when a disposition happens, offsetting the capital gain.

However, the transfer is the exception. The associated fee from transfer does not increase the cost basis and no deduction is available because its intention is to hold the cryptocurrency for investment purposes rather than disposition/acquisition of crypto.

Example 1:

  • Buy 10 ETH for AUD 10,000, with a purchase fee of AUD 100

Results:

  • Cost basis per coin: AUD (10,000 + 100) / 10 = AUD 1,010 per ETH

Example 2:

  • Buy 10 ETH for AUD 10,000 in account A

  • Transfer 5 ETH from account A to account B, with a transfer fee of AUD 50

Results:

  • Cost basis per coin in account A: AUD 10,000/10 = AUD 1,000 per ETH

  • Cost basis per coin in account B: AUD (1,000 * 5 ) / 5 = AUD 1,000 per ETH

Fee in taxable events (e.g. sell, trade, send, swap)

In a taxable event, the FMV of the fee is considered as an expense, which is typically included in the cost basis and deducted from the proceeds.

Example:

  • Buy 10 ETH for AUD 10,000

  • Sell 5 ETH for AUD 10,000, with a selling fee of AUD 100

Results:

  • Cost basis per coin: AUD 10,000/10 = AUD 1,000 per ETH

  • Proceeds: AUD 10,000

  • Total expense: AUD 100

  • Total cost basis for 5 ETH: AUD 1,000 * 5 + AUD 100 = AUD 5,100

  • Capital gain/loss: AUD 10,000 - 5,100 = AUD 4,900

What if your fee is in cryptocurrency?

This is the most confusing part of all, but we have you covered. When your fee is in cryptocurrency, it should be valued at FMV and will separately result in a capital gain/loss as it is considered a disposition of capital property. Therefore in taxable events, your transaction can contain up to 2 capital gains/losses, and they should be separately listed on your transaction records.

For non-taxable events, you’ll just need to calculate the capital gain/loss from the fee. Note that in a transfer transaction, the FMV of the fee cannot be added to the resulting coins’ cost basis.

Example 1:

  • Buy 10 ETH for AUD 10,000

  • Buy 5,000 CRO for AUD 1000 with a transaction fee of 0.1 ETH

  • Assume the ETH price has gone up to AUD 2,000 on the day of buying CRO

Results:

  • Cost basis per ETH: AUD 10,000/10 = AUD 1,000 per ETH

  • Cost basis per CRO: AUD (1,000 + 200)/5,000 = AUD 0.24 per CRO

  • Capital gain/loss from the fee = AUD (2,000 - 1,000) * 0.1 = AUD 100

Example 2:

  • Buy 10 ETH for AUD 10,000 in account A

  • Transfer 5 ETH from account A to account B, with a transfer fee of 0.1 ETH

  • Assume the ETH price has gone up to AUD 2,000 on the day of transfer

Results:

  • Cost basis per coin in account A: AUD 10,000/10 = AUD 1,000 per ETH

  • Cost basis per coin in account B: AUD (1,000 * 5 ) / 5 = AUD 1,000 per ETH

  • Capital gain/loss from the fee = AUD (2,000 - 1,000) * 0.1 = AUD 100

Example 3:

  • Buy 10 ETH for AUD 10,000

  • Sell 5 ETH for AUD 10,000, with a selling fee of 0.1 ETH

  • We know the ETH price is AUD 2,000 on the day of sell

Results:

  • Cost basis per coin: AUD 10,000/10 = AUD 1,000 per ETH

  • Proceeds: AUD 10,000

  • Transaction fee: AUD 2,000 * 0.1 = AUD 200

  • Total cost basis for 5 ETH: AUD 1,000 * 5 + AUD 200 = AUD 5,200

  • Capital gain/loss from the transaction: AUD 10,000 - AUD 5,200 = AUD 4,800

  • Capital gain/loss from the fee: AUD (2,000 - 1,000) * 0.1 = AUD 100

  • Total capital gain/loss: AUD 4,800 + 100 = 4,900

Cost Basis Methods

The ATO does not restrict users to choosing a particular cost basis method to calculate the taxes. Therefore, users can choose either First in First Out (FIFO), Last In First Out (LIFO), or Highest In First Out (HIFO) in Crypto.com Tax to calculate their own taxes. However, if you are a trader of cryptocurrency, it is recommended that you pick FIFO. Please see our FAQ for more details about the different cost basis methods.

Personal Use Assets

Cryptocurrency itself can qualify as a personal use asset in limited circumstances, and consequently, be exempt from capital gains tax. Cryptocurrency may be a personal use asset if it is acquired and kept mainly for personal use or consumption. However, it is not a personal use asset if it is acquired, kept, or used as an investment in the course of carrying on a business.

Only capital gains made from personal use assets acquired for less than $10,000 are disregarded for CGT purposes. All capital losses made on personal use assets are disregarded.

For example, where an individual acquires cryptocurrency to purchase airline tickets for less than $10,000 on the same day, it would be likely that the cryptocurrency is a personal use asset. No capital gain would be recognized when you pay for the tickets. We suggest users manually change the net worth to zero to remove the gain for this case. Please refer to this FAQ for more details about setting the net worth for a transaction.

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