Australia Crypto Tax Guide 2025: Latest ATO Updates

There are some crypto activities that are tax-exempt. These activities include:

💳  Buying crypto (including NFTs) with Australian dollars.

🔁  Transferring crypto between your own wallets.

🔒  Holding crypto.

🎁  Being gifted crypto.

⛏️  Rewards from hobby mining.

💳  Purchasing goods or services with crypto if the crypto is a personal use asset.

♥️  Donating crypto to a registered charity.

Crypto is classed as a property by the ATO. As such, profits from your trading activities may be taxed as capital gains or regular income depending on the specific transaction and how the ATO classifies your investment activities. 

If your crypto is taxed as regular income, you’ll pay Income Tax on the entirety of that income. If your crypto is taxed as a capital gain, you can access the long-term 50% capital gains tax discount and significantly reduce your tax bill. 

The ATO has some guidance on what constitutes a trader vs. an investor, but in brief:

🤑 A trader is using crypto to generate an income and is operating from a business setup. The specific ATO definition of a trader is someone who undertakes “business activities for the purpose of earning income from buying and selling shares”. Considerations include the volume of transactions, profit motive, record keeping and business plans. Traders’ profits are taxed as income and they cannot access the 50% long-term capital gains tax discount. 

🤓 An investor is an individual investing in a given asset for a future return with the goal of gradually building wealth over an extended period of time with profits made from long-term capital gains. In some instances, they may also have income depending on how the crypto was acquired. Investors can access a discount that gives them a 50% tax break on long-term capital gains.

For the remainder of this guide, we’ll focus on how transactions will be taxed for the majority of investors with capital gains and transactions that will be taxed as income regardless of whether you’re a trader or investor.

When you dispose of a property, like crypto, you’ll have a capital gain or loss. Gains and losses MAY BE subject to tax events. 

The ATO doesn’t have a specific capital gains tax rate. You’ll pay Income Tax (at whatever bracket rate you fall into) on short-term gains from assets held less than a year. Meanwhile, for long-term gains from assets held more than a year, you’ll receive a 50% discount (so you’ll only pay Income Tax at your bracket rate on half your gains).

You can see the latest ATO tax brackets here.

The following transactions are a disposal according to ATO guidance:

🏡  Selling crypto for Australian dollars or another fiat currency.

🤝🏽  Trading one crypto for another, including NFTs, stablecoins, or other tokens.

🧸  Spending crypto to pay for goods or services - unless that crypto is a personal use asset

🎁  Gifting crypto

A quick note here on the personal use asset rule - crypto can be a personal use asset, but the conditions necessary for this to be the case are very specific.

A personal use asset is a capital asset worth $10,000 or less that you keep for personal use or enjoyment, and gains and losses from these assets are ignored for tax purposes. For crypto, the ATO guidance says a crypto asset acquired and used in a short period of time to buy items for personal use is more likely to be a personal use asset, while a crypto asset acquired and held for some time before being used to buy items for personal use is less likely to be a personal use asset. In other words, if you bought crypto with the intention of using it to acquire goods, it may be a personal use asset. If you’ve held crypto long-term and used it to acquire goods, it is unlikely to be a personal use asset.

Even for individual investors, there are some transactions where your crypto profits will be ordinary income from a tax perspective (and taxed as such). These include:

💰  Getting paid in crypto
🏦  Staking rewards
💸  Referral bonuses
🪂  Airdrops of crypto - excluding initial allocation airdrops
🎨  Selling an NFT you've created

On top of this, while the ATO is yet to release specific guidance on DeFi transactions, this doesn’t mean your DeFi investments are tax free. Instead, you need to look at the existing guidance and infer the likely tax treatment, ideally with the help of an experienced crypto accountant.

Before you can calculate any gains or losses, you need your cost basis for your crypto. 

This is whatever it cost you to acquire your crypto, plus any allowable purchase or sale fees. For example, if you bought 1 BTC for $50,000 with a purchase fee of $500 - your cost basis for that BTC would be $50,500.

For crypto you otherwise acquired where you don’t have a clear purchase price, this is the fair market value of your crypto in AUD on the day you received it. 

In most instances, investors aren’t transacting with one crypto asset at a time. They’re transacting with multiple assets of the same kind across multiple platforms and tracking cost basis in these scenarios can get complicated. For example, if you bought 3 BTC at three different price points and later sold 1 BTC, how do you know which cost basis to use?

In these instances, the ATO says individual investors can choose from three different accounting methods to determine the order in which they disposed of their crypto and which cost basis to use:

🥇  FIFO (First In, First Out): This method dictates the first crypto you acquired is the first crypto you dispose of. This is often the preferred method for those looking to access long-term capital gains tax discounts.

🤑  HIFO (Highest In, First Out): This method dictates the crypto with the highest cost base is the first crypto you dispose of. This is often the preferred method for those looking to reduce their taxable gains as much as possible.

🤏  LIFO (Lowest In, First Out): This method dictates the crypto with the lowest cost base is the first crypto you dispose of.

For traders, the ATO is clear they may only use the FIFO accounting method.

Another thing you’ll need to factor in is wash sales. A wash sale is when an investor disposes of an asset and acquires the same (or a substantially similar asset) in a short period of time in order to create artificial losses for a tax advantage. The ATO doesn’t have a set period of time it considers a wash sale. Instead, it comes down to intent - so if an investor is seen to be deliberately creating artificial losses for a tax benefit, these transactions would constitute wash sales and the losses would be disallowed.

Once you have your cost basis (and accounting method determined), simply subtract your cost base from your sale price to determine your capital gain or loss. 

If you otherwise disposed of your crypto, for example by trading, spending, or gifting it, use the fair market value of your crypto in AUD on the day you disposed of it as your sale price. 

If you have a capital gain, you’ll pay Income Tax at your bracket rate on this gain. If you’ve held your asset for more than a year, you’ll receive a 50% discount meaning you’ll only pay tax on half of that gain.

If you have a capital loss, you can offset these losses against your taxable gains to reduce your tax bill.  If you don’t have any gains to offset losses against, you can carry these losses forward to offset against gains in the future.

If you lost your crypto - whether that’s from losing your private key or your crypto being stolen - you may be able to claim a capital loss with the ATO.

But this all depends on whether the amount lost is irrecoverable. In other words, you’ll need evidence (and plenty of it) that you cannot get your crypto back. For private key losses or in the instance of theft, this is more likely to be a successful claim for a capital loss with the ATO. While crypto losses due to hacks on exchanges and so forth, where the exchange may still reimburse you, may be less successful. 

Once you’ve calculated your gains, losses, and income - you report this to the ATO in your annual lodgment. You can do this via the ATO myTax service, or using paper forms including:

• The tax return for individuals (NAT 2541)
• The tax return for individuals (supplementary section - NAT 2679)
• The Capital Gains Tax Schedule if you earned more than $10,000

Getting all the information you need together in order to accurately calculate your crypto taxes is hard work, which is why most investors opt to use a crypto tax calculator like Koinly to make it simpler. 

With Koinly, you can either connect to Kraken via SSO (OAuth) to automatically import your data or you can export your account history from Kraken as a CSV file and upload this to Koinly instead. 

Once Koinly has your transaction data from Kraken, it identifies your cost basis and calculates your crypto gains, losses, income, and more. You can also pick between your preferred accounting method in order to see how this impacts your tax bill. Once you’re happy with the figures, you can generate your crypto tax reports, including the ATO myTax report and use this to easily report your crypto in your annual tax return.

You can’t avoid tax on your crypto without facing the ire of the ATO, but there are many steps investors can take to pay less tax legally, including: 

🔍  Tracking your unrealized losses to identify opportunities to harvest these losses. Koinly has a tax optimization feature that can help you with this!

🌽  Harvesting these losses in order to offset them against taxable gains and reduce your overall tax bill.

🧮  Pick the best accounting method for your circumstances from FIFO, HIFO, and LIFO.

🧓  Investing in a crypto SMSF.

💎  Hold crypto for more than a year before disposal to access a 50% long-term capital gains tax discount.

♥️ Donate to a deductible gift recipient to claim a tax deduction.

Now that you understand how your digital asset investments are taxed, why not continue your crypto journey by checking out our Learn Center.