Crypto Taxes
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Australia Crypto Tax Rates 2023: Breakdown by Income Level

Australia Crypto Tax Rates 2023: Breakdown by Income Level
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Wondering how much tax you’ll pay on your cryptocurrency? 

In this guide, we’ll break down everything you need to know about Australian cryptocurrency tax rates. We’ll also cover a simple tactic that can save you thousands of dollars on your tax return. 

How is cryptocurrency taxed in Australia? 

In Australia, cryptocurrency is subject to capital gains and ordinary income tax. 

Capital gains tax: When you dispose of cryptocurrency, you’ll incur capital gains or capital losses. Examples include selling your cryptocurrency or trading it for other digital assets. 

Ordinary income tax: When you earn cryptocurrency, you’ll recognize ordinary income. Examples include earning airdrops and staking rewards. 

For more information, check out our comprehensive guide to how cryptocurrency is taxed in Australia

What tax rate do I pay on my cryptocurrency? 

The tax rate you pay on your capital gains and ordinary income varies based on your income bracket. Here are Australia’s tax rates for the 2021-2022 financial year. 

Australia tax rates

All of your ordinary income and disposals from cryptocurrency held for less than 12 months will be taxed according to these tax rates.

Income earned from disposing of cryptocurrency held longer than 12 months is eligible for a 50% discount. That means you’ll only pay taxes on half of your capital gain. 

Do I pay the same tax rate on all of my income? 

It’s important to remember that you won’t pay the same flat tax rate for all of your income. Instead, you’ll pay the marginal tax rate based on each income tax threshold. 

For example, let’s imagine that you made $25,000 in income in a given financial year. Here’s how much tax you’ll pay on each individual portion of your income. 

marginal tax rates explained

What tax rates do traders pay on cryptocurrency? 

The vast majority of Australians who buy and sell crypto will be considered investors and pay the tax rates described above. However, if you’re buying and selling cryptocurrency in what the ATO calls an ‘organized, business manner’, you may be considered a trader. 

It’s important to remember that traders are not eligible for the capital gains discount for cryptocurrency disposed of after 12 months. 

However, any losses and costs can be deducted as expenses. 

If you’re unsure whether you’ll be considered a trader or an investor, check out the ATO’s guidelines on this topic

How can I avoid my cryptocurrency taxes? 

It can be difficult to  legally avoid all of your cryptocurrency taxes. However, strategies like tax-loss selling can help you legally reduce your capital gains and in-turn reduce your total tax bill. This is the practice of intentionally selling your cryptocurrency at a loss to offset your capital gains. 

tax-loss selling infographic

If your net capital loss is higher than your net capital gain, it can be carried forward into future tax years. 

Before you get started with tax-loss selling, it’s important to keep in mind the wash sale rule. The ATO does not allow investors to claim capital losses on an asset if they re-enter the same position a short time later. 

While the ATO does not specify a specific time period when you can re-enter your position, it’s important to remember that this rule is meant to discourage investors from selling assets and buying back in for the sole purpose of claiming tax benefits. 

Lodge your cryptocurrency taxes today

Want to get started lodging your cryptocurrency taxes? Try CoinLedger — the #1 crypto tax software for Australia. More than 400,000 investors around the world use the platform to report their crypto taxes in minutes. 

Get started with a free CoinLedger account today.

Frequently asked questions

Let’s cap things off by answering some frequently asked questions about cryptocurrency taxes.

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