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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.
What tax rate do I pay on my cryptocurrency in Australia?
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 2023-2024 financial year.
Income earned from disposing of cryptocurrency held longer than 12 months is eligible for a 50% discount. That means that only half of your capital gain will be considered taxable income.
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 on 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.
What tax rates do traders pay on cryptocurrency?
The vast majority of Australians who buy and sell crypto are considered investors. However, if you’re buying and selling cryptocurrency in what the ATO calls an ‘organized, business manner’, you may be considered a trader.
If you’re considered a trader, you will pay the same tax rates on cryptocurrency outlined above. However, you will not be eligible for the capital gains discount for cryptocurrency disposed of after 12 months.
One advantage of being considered a ‘trader’ is that you can write off losses and relevant 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 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.
How can I avoid my cryptocurrency taxes?
There are strategies that can help you legally avoid your cryptocurrency taxes. For example, tax-loss selling — the practice of intentionally selling your cryptocurrency at a loss for tax purposes — can offset your capital gains and reduce your tax liability.
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 crypto and other assets if they buy the same position shortly afterwards.
While the ATO does not specify a specific time period for when the wash sale rule applies, 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 500,000 investors around the world use the platform to report their crypto taxes in minutes.
Frequently asked questions
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