NFT Minting Tax in Australia: How Creators Are Actually Taxed

There is a meaningful tax difference between minting an NFT as a creator and buying one as a collector, and the two roles are often discussed as if the rules were identical. They are not. A collector buying and later selling an NFT is generally dealing with straightforward capital gains territory, covered in the broader guide to NFT tax in Australia. A creator minting and selling their own work is often closer to ordinary income territory, and the distinction has real consequences for how the activity is reported and what can be claimed against it.

As of 1 July 2027, CGT rules in Australia are set to change. Please visit this page for the revised tax rules.

 

Minting Itself: Usually Not a Taxable Event on Its Own

The act of minting an NFT, meaning creating the on-chain record of the asset, is generally not itself a disposal or a CGT event, because no asset is changing hands at that point. It is closer to the creation of a new asset than a transaction involving an existing one. What does matter from that point is the cost incurred to mint it, typically the gas fees paid to the network, which become relevant later when working out the profit or loss on an eventual sale.

Understanding the underlying mechanics of NFTs and the broader key concepts behind NFTs is useful background before minting anything with a commercial intention, since the tax treatment that follows depends heavily on why the asset was created and what happens to it afterwards, rather than on the minting transaction itself.

Where minting is done purely as a hobby, for personal creative interest with no real intention of building an ongoing income stream, the eventual sale of that NFT is more likely to be treated similarly to a collector’s disposal. Where minting is done systematically, with a clear intention to generate income from a body of creative or commercial work, the activity starts to look like carrying on a business, and the tax consequences shift accordingly.

 

Selling a Minted NFT: Income for Creators, Not Just a Capital Gain

For a creator who mints and sells their own NFT with a genuine commercial or business-like intention, the proceeds from that first sale are generally treated as ordinary assessable income, not a capital gain, in the same way an artist selling a physical artwork would declare the sale as income rather than a capital disposal. This is a fundamentally different tax position to a collector who buys an existing NFT and later sells it, whose gain or loss is assessed under standard CGT rules.

This distinction matters because it changes what discount, if any, is available. Ordinary income does not attract the 12-month CGT discount, regardless of how long the NFT existed before it sold, because the discount only applies to capital gains realised by individuals, not to income from carrying on a creative or commercial activity. Creators need to understand this clearly before assuming a long gap between minting and selling automatically produces a discounted outcome.

Whether a specific creator sits closer to hobbyist or business classification depends on the same kind of factors relevant elsewhere in crypto tax: frequency, scale, organisation and genuine profit intention, similar in spirit to the factors distinguishing a frequent trader from a long-term holder in an investment context. A single, occasional NFT sale sits differently to a creator systematically minting and selling a large collection.

 

Royalties, Secondary Sales and NFT Marketplaces

Many NFT collections generate ongoing royalty payments to the original creator on every secondary sale that happens afterwards, distributed automatically through the marketplace or smart contract. These royalty payments are generally treated as ordinary income to the creator at the time they are received, separate entirely from the tax treatment of the original minting sale, and they need to be tracked as their own recurring income stream rather than folded into the initial sale figure.

Understanding how NFT marketplaces actually structure and distribute these payments is useful practical context, since royalty mechanisms vary meaningfully between platforms, and some route payments in ways that are easy to miss in a wallet’s transaction history if you are not specifically watching for them. Creators active across multiple marketplaces effectively face the same reconciliation challenge as an investor holding across multiple wallets and exchanges, and need equally disciplined record-keeping.

Beyond pure digital art, NFTs are increasingly used for a broader range of purposes, and creators working in areas like NFTs beyond traditional art or the music industry’s use of NFTs and blockchain face the same underlying income-versus-capital question, regardless of the specific creative medium involved.

 

Costs, Losses and Reporting the Activity

Costs genuinely incurred in producing and minting NFTs, such as gas fees, platform fees and, where the activity is business-like, a proportion of relevant equipment or software costs, may be deductible against the income generated, provided the activity has been correctly classified as a business rather than a hobby in the first place. This is another reason the classification question deserves genuine attention rather than being assumed either way.

Not every minted NFT sells, and not every collection performs as hoped. Where minting costs were incurred and the resulting assets are ultimately worthless or unsellable, the treatment of that outcome should be assessed against the broader guidance on capital losses in Australia and tax loss harvesting, with the specific facts of a creator’s situation reviewed rather than assumed to mirror a standard investment loss.

All income and any subsequent disposals need to be reported through the process outlined in how to declare cryptocurrency on an Australian tax return, and creators generating meaningful volume should review the general ATO crypto reporting framework and the ATO’s visibility into wallet activity through its data matching program before assuming NFT-based income sits at lower priority than exchange-based trading activity.

 

Key Takeaways

Minting an NFT is generally not itself a taxable event, but the costs incurred become relevant to the eventual sale. Proceeds from a creator’s first sale of a minted NFT are typically ordinary income, not a capital gain, particularly where the activity is business-like. This means the 12-month CGT discount generally does not apply to a creator’s primary sale income. Ongoing royalties from secondary sales are a separate, recurring income stream needing their own record-keeping. Whether a creator is a hobbyist or running a business shapes both the income treatment and what costs can be deducted.

Shepley Capital provides education and market insights, not financial advice. Always conduct your own research before making any investment decisions.