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Crypto tax in Australia

If you've held a crypto asset for 12 months or more you may qualify for a 50% capital gains discount on your tax.

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It's that time of the year again.

If you've bought or sold cryptocurrency in the last financial year (1 July 2023 to 30 June 2024), it's vital that you understand your Australian crypto tax obligations.

You may need to pay tax on Bitcoin and other cryptocurrencies in Australia, but how you're taxed can vary depending on the type of crypto transaction and your circumstances.

In May 2024, the Australian Tax Office (ATO) announced it was seeking account and transaction details from crypto exchanges1 to identify users who may not be paying tax.

If you've traded crypto, it's likely you may also have received an email from the ATO explaining that you'll need to declare any crypto trades on your tax return.

In this guide we look at the basics of cryptocurrency tax in Australia to help you learn what you need to do to keep the ATO happy.

The following is a summary of some important details regarding how the ATO handles cryptocurrency at the time of writing (2 July 2024).

While the ATO's guidance on cryptocurrency has remained consistent for some time, it is still an evolving space, and rules and laws may change.

We're not tax experts, and general information such as that found in this guide is no substitute for professional advice. Consider your own situation and circumstances before relying on the information laid out here.

Visit the ATO's guide to cryptocurrencies for more information or contact them directly on 13 28 61.

Do you have to pay tax on cryptocurrency in Australia?

In most cases, the answer is yes.

Despite its name, cryptocurrency is treated as an asset, rather than currency by the ATO.

This means you have to pay capital gains tax on any profits made when selling cryptocurrency. This is very similar to how stocks are treated for tax purposes.

The good news is that if you have held the same asset for over 12 months without trading it for another, then you may qualify for a 50% discount on your capital gain.

This is just one of a number of ways you may be able to reduce your cryptocurrency tax bill in Australia.

If you don't report your crypto gains or losses, you are at significant risk of being audited. The ATO has both an excellent data matching program and immense amounts of data on cryptocurrency activities. They receive data from most exchanges and could use 3rd party tools to link a public key to you.

Tax works differently if you're a crypto trader or investor

Your tax responsibilities vary depending on whether the ATO classifies you as a crypto investor or trader.

Most people who buy and sell crypto occasionally will fall into the investor category. This means you'll be taxed under capital gains tax (CGT) rules.

But if you buy and sell large quantities of crypto in a business-like manner, the ATO may deem you to be carrying on a crypto trading business. If that's the case, your earnings are classified as business income and subject to income tax.

Check the ATO's Share Investing vs Share Trading guide for more information on whether you're an investor or a trader.

Let's take a look at how each is handled.

It is important to keep proper records of all your crypto-related transactions – the ATO allows the use of software to help meet record-keeping obligations

 Danny Talwar

Danny Talwar
Head of Tax, Koinly

Yes, the ATO knows about your crypto (and cares what you do with it!)

In a media release from May 2023, the ATO singled out capital gains from crypto assets as a priority this tax time.

"Don't fall into the trap of thinking we won't notice if you sell an asset for a gain and don't declare it" said assistant commissioner Tim Loh.

The ATO has had a cryptocurrency data-matching program in place since April 2019 and it can track data as far back as 2014.

This program allows the ATO to match its own records with crypto transaction data from exchanges to identify anyone who isn't meeting their Australian crypto tax obligations.

Loh reminded taxpayers that "Through our data collection processes, we know that many Aussies are buying, selling or exchanging digital coins and assets so it's important people understand what this means for their tax obligations".

It is important to keep proper records of all your crypto-related transactions – the ATO allows the use of software to help meet record-keeping obligations

 Danny Talwar

Danny Talwar
Head of Tax, Koinly

Working out your cryptocurrency capital gain (or loss)

You will make a capital gain if the proceeds from disposing of cryptocurrency exceed its cost base. The cost base is the purchase price you paid for the crypto plus brokerage fees and any other costs associated with buying and disposing of it.

To work out your capital gain or loss, you'll need to find out the value of the cryptocurrency in Australian dollars at the time of the transaction. The ATO says you can access this information through a reputable online exchange.

Capital gains can be calculated by subtracting the amount you paid for a cryptocurrency from the amount you sold it for. The resulting figure forms part of your assessable income and needs to be declared on your tax return.

If you purchased crypto directly with Australian dollars, or sold crypto for Australian dollars, it's easy to calculate purchase and sale prices – just remember to include brokerage fees in the total cost for each transaction.

However, if you purchased your crypto holdings using a widely traded digital currency like Bitcoin, you'll need to note down the Bitcoin price at the time of that trade.

There are also some services available to help simplify the record-keeping process. For example, Koinly and Crypto Tax Calculator are just some of the providers that offer accounting tools for crypto investors and traders that can be linked to your crypto exchange accounts to help you calculate capital gains. The ATO also offers a useful CGT record-keeping tool.

You can estimate your crypto tax using our free crypto tax calculator.

How much tax do you pay on cryptocurrency?

Capital gains tax isn't charged at a separate rate to income tax. Instead, any capital gains you make from crypto assets are taxed at the same rate as your income for the financial year.

So the amount of tax you pay on cryptocurrency in Australia depends on your individual income tax rate. Use the table below to determine the rate at which you'll be taxed. Of course, don't forget that a 50% CGT discount applies to investments that you've held for at least a year.

2021-22 Income tax rates for Australian residents

Taxable incomeTax you will pay on this income
$0 - $18,200Nil
$18,201 - $45,00019 cents for each $1 over $18,200
$45,001–$120,000$5,092 plus 32.5 cents for each $1 over $45,000
$120,001 - $180,000$29,467 plus 37 cents for each $1 over $120,000
$180,001 and over$51,667 plus 45 cents for each $1 over $180,000

Learn more about crypto CGT from the team at Koinly

Can you avoid paying crypto tax in Australia?

You may be eligible for the personal use asset exemption. Cryptocurrency transactions are exempt from CGT if:

  • The crypto is used to purchase goods or services for personal use, such as booking hotels online or shopping at retailers that accept digital currency; and
  • The capital gains you make are from personal use assets acquired for less than $10,000.

But there are a few terms and conditions that apply. The ATO explains that cryptocurrency is not classed as a personal use asset if it is acquired, kept or used:

  • As an investment
  • As part of a profit-making scheme
  • In the course of business activities

The ATO also states that if you hold cryptocurrency for some time before using it to buy items for personal use, it's "less likely" to be classified as a personal use asset. In other words, the longer you hold your crypto before spending it, the smaller your chances of qualifying for the personal use asset exemption.

You also may not be able to take advantage of the exemption if you need to use a payment gateway or bill payment service to purchase the items on your behalf, so check the ATO's fine print carefully before deciding whether you can avoid CGT.

What cryptocurrency tax records do you need to keep?

"It is important to keep proper records of all your crypto-related transactions – the ATO allows the use of software to help meet record-keeping obligations," explains Danny Talwar, Koinly's head of tax.

Records you should keep include:

  • The date of each transaction
  • The value of the cryptocurrency in Australian dollars at the time of the transaction
  • The purpose of the transaction
  • The details of the other party involved (even if it's just their crypto wallet address)

For example, if you want to claim the personal use exemption, you'll need to be able to prove that you used your cryptocurrency to buy an item or service for personal use.

The ATO outlines examples of the records you should keep, such as:

  • Receipts of cryptocurrency purchases or transfers
  • Exchange records
  • Records of agent, accountant and legal costs
  • Digital wallet records and keys
  • Software costs associated with the management of your tax affairs

There are also some services available to help simplify the record-keeping process. For example, CoinTracking is designed accounting tools for crypto investors and traders that can be linked to your crypto exchange accounts to help you calculate capital gains.

If you have not kept records of your tax, you can access historic price information from reputable websites that publish daily conversion rates for BTC/AUD, ETH/AUD etc. Your crypto exchange should also be able to provide you with details of your transaction history.

How tax works with these 5 crypto activities

How to minimise crypto tax in Australia (and make tax time easier)

There are several simple things you can do to gain a deeper understanding of your cryptocurrency tax obligations and to make sure you're fully compliant with all ATO regulations, including:

  • Hold for more than 12 months. If you're classed as a cryptocurrency investor, you'll be taxed on any capital gains resulting from your crypto transactions. However, if you hold your crypto for more than 12 months, you may be eligible for a 50% CGT discount.
  • Tax loss harvesting. Cryptocurrencies are notoriously volatile. If the value of some of the cryptocurrencies in your portfolio has plummeted and you sell them at a loss, you can use this to offset any capital gains for the year. This is a strategy known as tax loss harvesting and it can help you reduce your capital gains tax bill, so chat to a crypto tax expert to find out whether it's a viable approach for you.
  • Do your own research. Take a closer look at the ATO's guide to the taxation rules on cryptocurrencies for more information on how your crypto transactions will be taxed. You can also search for information or ask a question on the ATO Community forum.
  • Plan ahead. Consider your intentions as to how you will use cryptocurrency before you buy. For example, if you initially acquire Bitcoin for everyday personal purchases but later decide to hold it to make a long-term profit, make sure you're aware of the potential tax consequences.
  • Keep records. Keep track of your crypto transactions as you go. This will be much easier than searching for all the information you need come 30 June. Most exchanges will let you export a spreadsheet of your trades to help you keep track.
  • Think about deductions. Are you eligible to claim any deductions for expenses related to your crypto transactions, such as if you run a Bitcoin mining business?
  • Disclose, disclose, disclose. Don't assume that transactions made with Bitcoin and other cryptocurrencies are untraceable – they're not. And don't even think about "forgetting" to disclose the details of your crypto transactions, as the ATO is targeting crypto investors and has data-matching software in place to track transactions. The penalties for non-disclosure are severe.

However, the most important step you can take to better understand cryptocurrency tax is to talk to an expert.

Do I need an accountant for crypto tax?

Not only is Australian crypto tax complicated and confusing, it's also still evolving. While some people will have the knowledge to accurately report their crypto transactions themselves, many others – particularly those who have made substantial capital gains – will be better off getting help from an accountant or registered tax agent.

FAQs

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.
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Editor

James Edwards was the cryptocurrency editor at Finder. He led the editorial strategy and reported on the latest industry news to further Finder's mission of helping people make better financial decisions. A relatively early adopter, James has been using Bitcoin since 2013 and began working in the industry in 2017. He takes pride in his ability to boil down complex topics into language his parents can understand. His expertise has seen him called on to report at events such as TechCrunch Disrupt, CoinDesk Consensus and IBM Think, and he has coordinated a vast number of high-profile interviews with the industry's brightest minds. He is a regular contributor to Nasdaq and is frequently called upon for market commentary in Australia and abroad. See full bio

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