Wondering how Australia taxes Bitcoin and other cryptocurrencies? The ATO treats crypto-assets as property rather than as fiat currency, meaning there are clear tax obligations you need to understand. At 42 Advisory, we’ll help you navigate the cosmos of crypto taxation with clarity and confidence.
Yes. The ATO taxes crypto under existing income tax and capital gains tax (CGT) laws. Cryptocurrency is classified as a CGT asset, similar to shares or investment property.
At 42 Advisory, our crypto tax accountants help Australians navigate the complex, fast-moving world of digital asset taxation — ensuring full ATO compliance and peace of mind.
📘 ATO Reference: Tax treatment of crypto assets
Tax treatment depends on your intent and activity:
If you buy, hold, and sell crypto as an investment, you pay CGT when you dispose of it by:
Selling for any fiat currency
Swapping for another crypto
Spending on goods or services
Gifting or donating
Capital gain = Sale proceeds − Cost base (purchase price + fees).
If you hold crypto for 12 months or more, you may be eligible for the 50% CGT discount under ITAA 1997 s.115-100.
If you’re conducting crypto trading as a business activity, profits are treated as ordinary income under s.6-5 ITAA 1997. Expenses are deductible under s.8-1 ITAA 1997.
📘 ATO Reference: Crypto assets used in business
Crypto earned through mining, staking, airdrops, or DeFi rewards is considered income at its market value in AUD at the time you receive it.
📘 ATO Reference: Earning income from crypto assets
Not every crypto move triggers tax. The following are tax-free:
Buying crypto with fiat currency (AUD)
Holding or transferring between your own wallets
Receiving crypto as a genuine gift
Donating to a Deductible Gift Recipient (DGR) charity
Recently, 42 Advisory onboarded a client with a large crypto portfolio including XRP holdings.
The client prepared their crypto tax return using Summ (formerly Crypto Tax Calculator). However, one wallet import was incomplete — the software misread several internal transfers between accounts, treating them as new income inflows.
On paper, it appeared the client had an XRP balance exceeding $10 million AUD — resulting in overstated capital gains and incorrect ATO reporting.
Our forensic review identified and corrected the issue:
Reconciled all wallet transactions manually
Reclassified internal transfers to eliminate duplication
Recalculated true capital gains and income recognition
Lodged an amended return to restore compliance
The outcome: accurate tax position, reduced exposure, and full transparency with the ATO.
This case highlights the importance of using qualified crypto tax accountants — not just software.
If your crypto decreases in value or is lost in a scam, you may be able to claim a capital loss — provided you can substantiate it.
Records must include:
Transaction dates and AUD values
Wallet addresses and exchange details
Receipts or screenshots proving ownership
📘 ATO Reference: Keeping records for crypto assets
The ATO hasn’t yet issued comprehensive DeFi guidance, but principles remain:
Earning tokens = income
Selling or swapping = disposal
NFTs are treated as CGT assets unless part of business inventory.
📘ATO Reference: Crypto asset transactions
Crypto transactions are reported in your individual income tax return (label 18 or 21).
Financial year: 1 July – 30 June
Lodgement deadline: 31 October (self-lodgers) or 15 May (via a registered tax agent, such as 42 Advisory – provided you engage the agent and are listed on their client lodgement program by 31 October)
42 Advisory recommends:
Hold crypto >12 months to qualify for CGT discount.
Offset capital losses against other gains.
Donate to registered charities before 30 June.
Use crypto tax software (e.g. Koinly, Syla, CoinTracking) integrated with your ATO records for audit-ready compliance.
Australia’s crypto tax laws are evolving — but the fundamentals are clear:
Treat crypto like any other investment, maintain meticulous records, and seek qualified crypto tax advice.
At 42 Advisory, our crypto tax accountants combine ATO-compliant expertise with real-world experience across DeFi, NFTs, and staking. Whether you’re managing $10K or $10M in digital assets, we ensure your tax plan stays compliant, accurate, and calm — even when the markets aren’t.