Cryptocurrency and Your Tax Return: What You Need to Know

Written by Shara Cox & Lavinia Pera

In recent years, cryptocurrency has moved from the fringes of finance into the mainstream. Whether you’re trading Bitcoin, investing in altcoins, or dabbling in NFTs, it’s important to understand that these activities can have tax implications and the ATO is paying close attention.

How Does the ATO View Cryptocurrency?

The Australian Taxation Office treats cryptocurrency as an asset, not a form of currency. This means most crypto transactions are subject to Capital Gains Tax (CGT), similar to shares or property.

If you’ve sold, swapped, gifted, or converted cryptocurrency into fiat currency (like AUD), you may have triggered a taxable event. Even converting one crypto asset into another (for example, swapping Ethereum for Bitcoin) counts as a disposal, and the ATO expects it to be reported.

But if you're acquiring and selling crypto with the intention of making a profit, especially as part of a business or regular trading activity, those earnings may be treated as income rather than a capital gain.

Common Taxable Crypto Events:

  • Selling cryptocurrency for cash

  • Swapping one cryptocurrency for another

  • Using crypto to pay for goods or services

  • Gifting cryptocurrency

  • Earning crypto through mining, staking, or as payment for work (this is generally treated as income, not capital gain)

Keeping Records is Essential

The ATO expects detailed records of every transaction, including:

  • Dates of acquisition and disposal

  • The value of the crypto in Australian dollars at the time of the transaction

  • What the transaction was for (sale, swap, purchase, etc.)

  • Details of the other party involved (where possible)

Crypto exchanges don’t always provide tax-ready summaries, so maintaining your own records is crucial for accurate reporting.

What About Losses?

If you’ve made losses on crypto, these may be used to offset capital gains from other investments. However, crypto losses cannot be used to reduce other types of income, such as wages or business income. Carry-forward losses can be applied in future years.

Why It Matters

The ATO is increasing its focus on cryptocurrency transactions and is using data-matching programs to track activity across major exchanges. Failing to report your crypto correctly can lead to penalties, interest charges, and amended assessments.

 We’re Here to Help

Cryptocurrency tax can be complex, especially if you’ve made multiple trades or held crypto across different platforms. If you’re unsure about how your transactions affect your tax return, or if you’d like help organising your records, our team is here to guide you.

Contact us to discuss your situation and make sure you’re reporting correctly this tax time.

Jenni Anderson