June 30 comes around fast. If you’ve been trading crypto this financial year and haven’t thought about tax yet, now might be the time.
Here’s what actually matters heading into EOFY.
The ATO already knows about your trades
Before diving into anything else: the ATO runs data-matching programs with Australian and international exchanges. If you traded on Coinbase, Swyftx, Binance, CoinSpot, or any major platform, that data has likely already been shared.
Assuming crypto is invisible to the tax office is one of the most expensive mistakes an Australian trader can make. Declare everything.
Are you an investor or a trader? It changes what you owe
This is the question many don’t consider.
Investors are classified as those who hold crypto primarily for long-term growth. Gains are taxed under Capital Gains Tax (CGT) rules, and if you’ve held an asset for over 12 months before selling, you’re potentially eligible for a 50% CGT discount.
Traders are considered to operate more like a business – adopting a frequent buying and selling, systematic approach. The ATO typically taxes trader profits as ordinary business income. This means those classified as traders aren’t usually eligible for a CGT discount – but they can often claim business-related deductions.
Most Australians fall into the investor category. But if you’ve been actively trading all year, it’s worth getting clarity on where you land before you lodge.
Every disposal is a taxable event
This is where people may get caught out. A disposal doesn’t just occur when you sell crypto for AUD. Under ATO rules, you can trigger a CGT event when you:
- Sell crypto for Australian dollars
- Swap one crypto for another (BTC to ETH counts)
- Spend crypto on goods or services
- Gift crypto to someone else
What’s typically not taxable: transferring crypto between wallets you own, and holding without selling. However, even these actions in certain circumstances can incur taxable events, such as an on-chain wallet that automatically stakes.
Consider waiting before disposal
If you’re sitting on a position that’s in profit and you’ve held it for just under 12 months, selling before EOFY means paying tax on the full gain. Waiting until you cross that mark can cut the tax bill in half.
Many people don’t check their purchase dates before selling.
Losses reduce what you owe
Losses offset your capital gains and can reduce what you owe. If they exceed your gains, you can carry the excess capital losses forward to future years with no expiry. But, like everything, you have to actually record and report them.
If you’re holding positions that are underwater, selling before June 30 locks in those losses for that financial year’s return.
Staking, DeFi, and airdrops: taxable as income
Rewards from staking, DeFi yield, and most airdrops are treated as ordinary income, not capital gains. You report the AUD value of those rewards at the time you received them, regardless of whether you’ve sold the tokens since.
The common mistake: people assume they only owe tax when they eventually sell. The income event happens at receipt.
Gains made between the time of acquisition and sale are typically considered capital gains.
Get your records sorted now, not in October
You need to account for:
- The date of every transaction
- The AUD value at the time of each transaction
- The cost basis for every asset you’ve disposed of
If you’ve traded across multiple exchanges and wallets, this can get messy fast. A crypto tax tool could save you hours and lessen the possibility of errors. The October 31 lodgement deadline feels far away…until it isn’t.
Cost basis method: the choice affects your tax bill
Australian investors can generally choose between FIFO (first in, first out), HIFO (highest in, first out), or LIFO (last in, first out), provided they have the records to support it. Aussies classified as traders are required to use FIFO.
In a bull market, HIFO typically produces smaller taxable gains by disposing of your highest-cost units first. It’s worth running the numbers for each cost basis method before you decide.
The bottom line
EOFY is a decision point. Which positions do you sell before June 30? Which do you hold past the 12-month mark? Which losses do you crystallise? These decisions have real dollar implications.
It’s almost always a good idea to discuss your personal situation with a financial professional – especially one with expertise in digital assets. Good advice almost always costs less than getting it wrong.
Summ takes the headache out of crypto taxes
Navigating crypto taxes in Australia can be a daunting task, especially when dealing with on-chain transactions involving staking, airdrops, DeFi and NFTs. Summ (formerly Crypto Tax Calculator) can help handle the complicated process of declaring your crypto asset activities with tax regulators. Summ is designed to negotiate complex on-chain transactions, ensuring you stay compliant with ATO regulations while potentially minimising your tax bill.
If you’re not already taking advantage of crypto tax software, you can make tax time easier this year with Summ. CNA readers get 30% off all paid plans by using code CNASUMM30 at checkout or by signing up here.
This article is general in nature and does not constitute financial or tax advice. For advice specific to your situation, consult a registered tax professional. Summ is a partner of Crypto News Australia.
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