CRYPTO TAX & REGULATIONS

Capital Gains Tax for Cryptocurrency in Australia

What Are Capital Gains and Capital Losses?

In Australia, Capital Gains Tax (CGT) applies whenever you sell, swap, or otherwise dispose of a crypto asset. This includes trading one coin for another, selling for fiat, or using crypto to buy goods or services.

A capital gain occurs when your crypto’s sale price exceeds your cost base (what you originally paid for it, including fees).

EG: Bought one Bitcoin at $50K. Price rises to $90K per one Bitcoin. You sell your entire one Bitcoin, resulting in a $40k realised Capital Gain (Profit). That $40k is Taxable.

A capital loss occurs when your sale price is less than your cost base.

EG: Bought one Bitcoin at $100K. Price falls to $75K per one Bitcoin. You sell your entire one Bitcoin, resulting in a $25k realised Capital Loss (Net Loss). That $25k is a tax reducing event (Deferred tax benefits towards future CGT).

As at the time of writing this resource (October 2025), the Australian Tax Office (ATO) treats crypto as an asset, not a currency, meaning every transaction that disposes of crypto can create a taxable event.

The Key to Managing Crypto Tax: Strategic Realisation

Understanding when to realise a loss or a gain is critical. In a volatile market, you can use these movements to your advantage.

Let’s look at the example:

You buy 1 BTC at $100,000.
BTC falls to $50,000.
You sell 1 BTC for $50,000, creating a capital loss of $50,000.
You instantly buy back 1 BTC for $50,000.

Now your tax record shows:

A $50,000 realised capital loss.
No taxable gain on the repurchase (since it’s a new acquisition).

This capital loss can be offset for a number of years, remaining a useful tax tool for future CGT minimisation.

If BTC later rises to $120,000 and you sell:

You’ll have a capital gain of $70,000 ($120,000 – $50,000).
But you can offset that gain with the $50,000 loss you previously realised.

Effectively, you only pay CGT on the net $20,000 gain, not the full $70,000.

Compounding as a tax tool, CGT in Australia is also decided by the duration of which you hold your untouched assets. If you hold your purchased Bitcoin for less than a 12 month period, your entire profits are subject to CGT. However, if you purchased Bitcoin over 12 months ago, your profits would qualify for a 50% CGT discount, essentially halving the taxable profits.

Lets play out this scenario of a corporate employee who invests on the side:

Purchase & Sale Details

Purchase price (cost base): $100,000
Sale price (capital proceeds): $150,000
Capital gain (before discount): $150,000 – $100,000 = $50,000

Holding Period

The Bitcoin investment was held for 1.5 years (18 months).
As that is longer than 12 months, the investor qualifies for the 50% CGT discount (for individuals and trusts).

Apply the 50% CGT Discount

Discounted capital gain: $50,000 × 50% = $25,000

So, the taxable capital gain is now $25,000

Tax Payable Depends on Your Income Bracket

The discounted gain ($25,000) is added to the investor’s taxable income for the year and taxed at their marginal income tax rate.

For 2025/26, the Australian individual tax brackets (excluding 2% Medicare levy) are as follows:

Taxable Income

Tax Rate

0 – $18,200

Nil

$18,201 – $45,000

16c for each $1 over $18,200

$45,001 – $135,000

$4,288 plus 30c for each $1 over $45,000

$135,001 – $190,000

$31,288 plus 37c for each $1 over $135,000

$190,001 and over

$51,638 plus 45c for each $1 over $190,000

The Key to Managing Crypto Tax: Strategic Realisation

Here’s how you can maximise tax benefits legally and effectively:

Offset current-year gains:
If you made gains earlier in the year (e.g., from selling ETH, stocks, or property), realise strategic losses before June 30 to offset them.

Carry forward losses:
If you have no gains this year, you can carry capital losses forward indefinitely to reduce future taxable gains.

Long-term holding discount:

If you hold crypto for 12 months or more before selling, individuals can get a 50% CGT discount on gains. This doesn’t apply to companies.

Keep clean records:
The ATO requires detailed records for every trade, including:

Dates of acquisition and disposal
Cost base and sale proceeds
Transaction fees
Purpose of the transaction (investment, personal use, etc.)

Use crypto tax software or spreadsheets to maintain accuracy.

(COMING SOON | Shepley Capital Investment Tax Calculator)

Example Scenarios of CGT

Here are a few bonus scenarios to help you understand the concept of CGT:

Scenario 1 – Tax-Loss Harvesting Mid-Year:
You bought 2 ETH at $5,000 each ($10,000 total).
ETH drops to $3,000 each ($6,000 total).
You sell both for $6,000 and immediately buy back 2 ETH.
Result: $4,000 realised capital loss.
You can use that to offset other capital gains that year.

Scenario 2 – Long-Term Investor:
You bought 1 BTC at $40,000 in 2021.
You sell at $80,000 in 2024 after 3 years.
Your gain is $40,000, but with the 50% CGT discount, you only pay tax on $20,000.

Scenario 3 – Portfolio Rebalancing:
You decide to exit a poorly performing altcoin and rebalance into BTC.
You sell the altcoin at a loss, realise a deductible capital loss, and reinvest in a more stable asset.

Final Notes for CGT Regulations in Australia

Crypto-to-crypto trades are taxable events in Australia. Swapping ETH for BTC still triggers CGT.
Using crypto to buy goods or services also triggers a disposal.
You cannot offset capital losses against ordinary income (like wages). Only against capital gains.
Losses from theft or scams may also be claimable if properly documented.