Guide to Crypto Taxes in Australia for 2024

Zac McClure
ByZac McClure, MBAReviewed byTynisa (Ty) Gaines, EAUpdated on May 20, 2024 · minute read
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The Australian Tax Office (ATO) provides guidelines on cryptocurrency taxes. Depending on the transaction types, the ATO treats crypto earnings as capital gains or as ordinary income taxes. It also has outlined tax policies for bitcoin mining, trading between fiat and other cryptocurrencies, gifts and purchases of goods and services. 

In Australia, you pay tax based on your activities for the year trailing 30 June (starting July 1) of the year in which you file taxes. You have plenty of time to understand the nuances of your cryptocurrency taxes as the tax report deadline is October 31. 

Crypto sales and swaps: Capital gains tax

Crypto-to-crypto transactions and crypto to fiat (i.e. AUD) trades are subject to capital gains taxes. When you sell or exchange a crypto asset, you subtract the cost basis (amount you originally paid for the crypto) from the proceeds (sales price total) to calculate your crypto gain or loss from that trade. 

Capital gains corrected

The total capital gains for your crypto trades are reported in Section 18 of the Australian tax forms. Note that if you wait 12 months before selling or exchanging away the crypto, there is a 50% discount on your capital gains before the tax rate is applied.

ATO crypto tax form Section 18

In Australia, you are only allowed to take losses against future capital gains. For example, if you have a net capital loss this tax year, you cannot use it to reduce your income tax. You can use the net capital loss to offset your capital gains in future tax years. 

2022 Update to Cryptocurrency Capital Gains Taxes

On October 25, 2022, The Australian Taxation Office released 2022-23 budget papers stating that crypto transactions will be taxed as an asset rather than as a foreign currency. Central Bank Digital Currencies (CBDCs), however, will still be taxed as foreign currency.

As a result, a crypto gains tax will be applied to profits gained through trading or selling on centralized exchanges.

This digital currency tax legislation will be backdated to July 1, 2021.

Airdrops and staking rewards: Ordinary income tax

Australia taxes airdrops and staking rewards as ordinary income.[1] If you subsequently trade that income for crypto or cash, any increase in its value will be taxed as a capital gain. The cost basis for this exchange will be the value of the crypto at the time you earned it.

The ATO provides a few examples to clarify the two-step tax process:

ATO example of crypto airdrop taxation

Crypto income is reported on Question 2 of the Australian tax forms.

Hard forks: Not taxable

In the event of a hard fork (chain split), the investor will not realize ordinary income or a capital gain when they receive the new cryptocurrency. If the new asset is held and then sold, profit will be taxed as a capital gain with a cost basis of $0.

Crypto gift tax

Crypto gifts are treated the same way as crypto trades. When you give crypto as a gift, its value at the time of your gift is your sale value. You are taxed on the difference between your sale value and your purchase value.

Australian crypto gifts example

  • You buy $600 worth of BCH.

  • Later, you give it to your niece. At the time of the gift, the BCH is valued at $800.

  • Your report $200 of capital gains.

Similarly, if receive crypto as a gift, you realize a capital gain at the time you exchange or sell the crypto. Your cost basis is the value at the time you received the crypto gift.

Australian crypto gifts example

  • You receive $800 dollars worth of BCH as a holiday gift.

  • You exchange it the next year for $1,000.

  • You have $200 of taxable gains.

Business crypto tax

If you are a corporation or "share trader," such as an exchange, mining entity, or someone trading crypto as a business, the ATO taxes your cryptocurrency gains or income as ordinary income. You may also be able to deduct business expenses from your earnings.

Losses are also taken into account as part of the corporate accounting books, the same as would be true of any business activity utilizing dollars. The ATO has examples of corporate crypto taxes on different business activities.

Crypto accounting methods

The ATO clarified that average investors can use any crypto accounting method, as long as each tax lot can be specifically identified. However, if you are classified as a "trader," or someone conducting crypto trades as a business, you can only use HIFO or average cost basis accounting.

Crypto wash sales

In summer 2022, the ATO warned taxpayers that crypto wash sales are forbidden, and could result in penalties for those who try to use them to reduce their capital gains totals.[2]

Tax deductions for stolen crypto

Per ATO guidance, stolen crypto can be deducted as a loss. The ATO does require careful documentation to substantiate these claims.

Crypto personal use assets

Very short-term crypto holdings of less than $10,000 may be tax exempt if they are used in full to make a single, one-time purchase. The requirements are very strict, so trading activity would definitely not fall into this category.

Here's an example of a transaction that might be: If you could only buy a television in Bitcoin, so you traded dollars into Bitcoin for the exact purchase amount and bought the television that same day, you may be tax exempt, but this is a gray area where you should consult with a crypto tax professional

Australian crypto taxes FAQs

Here are answers to frequently asked questions about Australian crypto taxes.

How are crypto sales and swaps taxed in Australia?

Crypto-to-crypto transactions and conversions to fiat currency (e.g., AUD) are subject to capital gains taxes in Australia. Upon selling or exchanging a cryptocurrency asset, individuals subtract the cost basis (original purchase price) from the proceeds (total sales price) to determine the gain or loss from the transaction.

These gains are reported in Section 18 of Australian tax forms, with a potential 50% discount on capital gains if the asset is held for at least 12 months before sale.

How does the ATO treat airdrops, staking rewards, and hard forks for taxation purposes?

In Australia, airdrops and staking rewards are considered ordinary income and taxed accordingly. If this income is later traded for crypto or cash and appreciates in value, any increase is subject to capital gains tax, with the cost basis being the value of the crypto at the time of receipt.

However, in the case of hard forks, investors do not realize ordinary income or capital gains when receiving the new cryptocurrency. If the new asset is subsequently sold, any profit is taxed as a capital gain with a cost basis of $0.

What are the tax implications of crypto gifts and business-related crypto activities in Australia?

Crypto gifts are treated similarly to crypto trades, with the value of the gift at the time of exchange constituting the sale value. Tax is calculated based on the difference between the sale and purchase values. For businesses engaged in crypto activities, such as exchanges or mining entities, gains or income from cryptocurrency are taxed as ordinary income.

Business expenses may be deductible, and losses are accounted for in the corporate accounting books. Additionally, the ATO allows various crypto accounting methods for average investors but limits traders to specific methods such as HIFO or average cost basis accounting.

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References

Last reviewed by Tynisa (Ty) Gaines,EA on May 20, 2024 · Sources

Zac McClure
Zac McClureCo-Founder & CEO at TokenTax
Zac co-founded TokenTax after his career in international finance and accounting at JPMorgan, Imprint Capital and Bain. He has worked in more than half-dozen countries and received his MBA from the UPenn Wharton School.
Tynisa (Ty) Gaines
Reviewed byTynisa (Ty) GainesTax Expert at TokenTax
Tynisa (Ty) Gaines, EA has more than 20 years of experience as a tax professional. Ty has published numerous tax articles, two tax e-books, and an academic publication on cryptocurrency for the National Income Tax Workbook.

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