Every tax season, the same patterns show up in crypto returns. Someone bought ETH, swapped it for SOL, staked some tokens along the way, and received an airdrop back in November. They assume none of it is taxable because they never cashed out to Australian dollars. Then the ATO disagrees, and an amended assessment follows. Working with crypto investors at a registered Chartered Accountancy practice, our team at Tax NextGen sees this play out regularly, and it is entirely avoidable once you understand how cryptocurrency tax ATO rules actually work.
The ATO does not have a separate cryptocurrency tax regime. It applies existing tax law: the capital gains tax framework for investment disposals, and ordinary income rules for revenue-based receipts. What makes crypto genuinely complex is that both frameworks can apply to the same person in the same income year, and every transaction type carries a specific treatment. This guide covers when CGT applies versus ordinary income, how to calculate your gains and losses, what records the law requires you to keep, and how to report everything correctly in myTax.
Cryptocurrency tax ATO: CGT asset versus ordinary income
Holding crypto as an investment triggers CGT
When you hold cryptocurrency as an investment, the ATO classifies it as a CGT asset. Any disposal of that asset creates a CGT event, and a capital gain or loss must be calculated. A disposal is not limited to selling your crypto for dollars. The ATO defines disposal broadly: selling, swapping, spending, gifting, and converting crypto to fiat currency all count. Even buying a product online using Bitcoin is a disposal, with proceeds assessed at the AUD value of the purchase at that point in time.
This catches many investors off guard because the mental model of “I only pay tax when I cash out” does not reflect ATO guidance. The ATO has maintained a consistent position on cryptocurrency tax for a number of years. If you disposed of crypto during the income year in any of these ways, you have a CGT event to report.
When crypto flips to ordinary income
Certain crypto receipts bypass CGT entirely and are taxed as ordinary income in the year you receive them. Staking rewards, mining income, salary or wages paid in cryptocurrency, and payments received for professional services all fall into this category. The ATO also treats crypto dealings as ordinary income when they form part of a profit-making scheme or a business of trading, rather than an investment activity.
The core distinction is purpose. Are you holding crypto to benefit from long-term price appreciation? That is investment activity, and CGT applies on disposal. Are you receiving crypto as a result of providing something, running a business, or engaging in a revenue-focused scheme? That is ordinary income. Both can coexist in the same return, which is why accurate categorisation matters.
How to calculate your capital gain or loss on crypto disposals
Working out your cost base
Your cost base is the AUD amount you paid to acquire the cryptocurrency, plus eligible costs directly associated with that acquisition, such as exchange fees or brokerage. For example, if you purchased 1 ETH for AUD 3,000 and paid AUD 30 in transaction fees, your cost base is AUD 3,030. When you later sell or swap that ETH, your gain or loss is calculated against that cost base figure.
For crypto-to-crypto swaps, the cost base of the incoming asset is the AUD market value of the crypto you received at the time of the exchange. That same figure is also used as the proceeds for the outgoing asset. You need to know the AUD market value of both sides of every swap, which is why transaction-by-transaction records are essential.
CGT crypto Australia: gain and loss across different disposal types
There are four common disposal types that crypto investors encounter, and each is generally a CGT event under ATO rules. Note that certain circumstances, such as transfers between your own wallets, or transactions that meet the personal use asset threshold, can affect how CGT applies, so it is worth checking ATO guidance for your specific situation. In most cases, the calculation works as follows:
- Selling crypto for fiat: proceeds are the AUD amount you received.
- Swapping one crypto for another: proceeds are the AUD market value of the incoming asset at the time of the swap.
- Spending crypto on goods or services: proceeds are the AUD value of the purchase at the time of payment.
- Gifting crypto: proceeds are the AUD market value of the crypto at the time you gave it away.
In each case, your capital gain equals proceeds minus cost base. If the cost base exceeds proceeds, the result is a capital loss. Capital losses can only be offset against capital gains, not against other income, so keeping accurate records of losses is just as valuable as tracking gains.
The 12-month CGT discount rule
If you held a crypto asset for more than 12 months before disposing of it, you are potentially eligible for the 50% CGT discount as an individual investor. This discount applies to the net capital gain after you have already offset any capital losses for the year. It cannot be used to convert a gain into a loss.
The practical effect is significant. A gain of AUD 10,000 on a crypto asset held for over 12 months becomes a net capital gain of AUD 5,000 after the discount, and that is the amount added to your assessable income. Short-term holdings, those sold within 12 months of acquisition, are taxed on the full gain with no discount applied.
Staking rewards, airdrops, mining income, and chain splits
Staking and airdrop income: taxed on receipt
Staking rewards are assessed as ordinary income in the income year you receive the tokens, based on their AUD market value on the day of receipt. They are reported under “other income” in your tax return, separate from the capital gains section. The same treatment applies to most airdrops received in the ordinary course of investing activity, though airdrops received incidentally, for example, as part of a hobby or promotional event rather than an investing activity, may be treated differently under ATO guidance. The amount you include as income at receipt becomes the cost base of those tokens for any future CGT calculation when you later sell or swap them.
This two-step treatment is a common source of confusion in crypto returns. The receipt creates an income tax liability. The later disposal creates a separate CGT liability, calculated using the income-at-receipt amount as the cost base. Both must be reported correctly, and they appear in different sections of your return.
Mining income and the treatment of chain splits
Mining income is taxed as ordinary income, and for those running a mining business, it is included as assessable income when derived. Chain splits and hard forks are treated differently: the split itself does not trigger a CGT event. The ATO’s position is that CGT event A1 applies only when you later dispose of the tokens received as a result of the split. The cost base of new tokens acquired through a chain split warrants specific attention, the ATO’s guidance on this point is nuanced, and depending on the circumstances, the applicable cost base may differ. We recommend consulting the ATO’s dedicated chain split guidance or speaking with a registered tax agent to confirm the correct treatment for your situation.
Cryptocurrency tax ATO record-keeping requirements
The five-year rule and what each record must capture
The ATO requires crypto records to be kept for five years from the later of when you prepared or obtained the records, when the transactions or acts are complete, or when the CGT event occurs. For every transaction, your records must include:
- The date of the transaction
- The type of transaction
- The AUD value at the time
- The other party’s details or wallet address
- Exchange records, wallet records, and keys
- Receipts for purchases and transfers
- Any associated fees
Records must be in writing, electronic formats are acceptable, and they must be in English or translatable into English. The ATO requires records to be kept for each crypto asset separately so that CGT can be calculated accurately across different acquisition dates and cost bases. Lumping all your crypto activity into a single summary will not satisfy this requirement.
Practical tools for staying compliant
Exchange CSV exports and wallet transaction histories are the standard starting point for building your records. Crypto tax software such as Koinly or CoinTracker can consolidate data from multiple exchanges and wallets into a single CGT report, which is particularly useful for investors with activity across several platforms. The ATO also provides its own online calculator and record-keeping tool for crypto CGT, worth bookmarking as an official reference. Regardless of which method you use, the ATO advises exporting your transaction history regularly rather than attempting to reconstruct months of activity at tax time.
How to report crypto in myTax: cryptocurrency tax ATO reporting
Capital gains at Item 18 and attaching your calculation
Crypto tax ATO reporting starts with Item 18 in myTax, under “Capital gains or losses.” You will need a separate capital gains calculation prepared as an attachment that itemises each disposal with the proceeds, cost base, and resulting gain or loss. This file is uploaded in the Attachments section of myTax using the file type “Attachment regarding crypto assets.” If your total current year capital gain or loss exceeds AUD 10,000, you will also need to complete the Capital gains tax schedule.
The calculation attachment is not optional. Reporting a single net figure at Item 18 without the itemised breakdown is one of the most common reasons the ATO flags crypto returns for review. The ATO needs to see how you arrived at the number you have declared.
Where to report staking, airdrop, and other crypto income
Staking rewards, airdrop income, and mining income are reported under “Other income” rather than in the capital gains section. The AUD market value at the time of receipt is the figure to declare. Misclassifying staking rewards as capital gains, or omitting them entirely, is a consistently common error in crypto tax reporting and a known ATO data-matching trigger. These two categories, capital gains and other income, require separate reporting, and the distinction must be applied correctly for every income type received during the year.
Why getting crypto tax wrong carries real ATO audit risk
The scale of errors the ATO is catching
The ATO has flagged cryptocurrency as a compliance focus area and uses a data-matching programme with Australian exchanges to identify undeclared transactions. Common errors include treating crypto-to-crypto swaps as non-taxable events, omitting staking or airdrop income, applying the 50% CGT discount before offsetting capital losses, and lodging without an attached capital gains calculation. Each one is addressed in ATO guidance, and each can result in an amended assessment, interest charges, or a full audit.
How Tax NextGen reduces that risk for crypto investors
A registered Chartered Accountant who handles crypto returns regularly knows precisely what the ATO looks for, how to reconcile transaction histories from multiple exchanges, and how to structure the CGT calculation correctly. Tax NextGen’s team works with crypto investors across a wide range of situations, from straightforward single-exchange portfolios through to clients with DeFi activity, staking income, chain split tokens, and wallets spanning multiple blockchains. Returns are reviewed and lodged by our Chartered Accountants, bringing professional oversight to every file.
Lodging with a specialist significantly reduces the chance of an error appearing in your return. If the ATO ever raises questions, you also have a registered agent who prepared the return and can explain exactly what was declared and why.
Ready to get started? Book a free initial consultation with Tax NextGen and have one of our Chartered Accountants review your situation before you lodge.
Getting cryptocurrency tax right is achievable with the right framework
The ATO’s approach to cryptocurrency tax is detailed, but it follows a consistent logic once you understand the framework. Crypto held as an investment is a CGT asset, and every disposal, whether a sale, swap, purchase, or gift, is a taxable event. Staking rewards, airdrops, and mining income are assessed as ordinary income in the year of receipt. Records covering every transaction must be retained for at least five years. Capital gains are reported at Item 18 in myTax with an attached itemised calculation, and income-type crypto receipts go under “other income” separately.
If you have crypto transactions to include in your return this year, seeking advice from a registered Chartered Accountant before you lodge is the most straightforward way to stay on the right side of the ATO’s cryptocurrency tax requirements. Reach out to Tax NextGen for a free consultation and make sure your return reflects everything the ATO expects to see.
