Rebase tokens have become one of the newest trends to hit crypto, with projects like Olympus DAO and subsequent forks, like Wonderland Money, all gaining huge popularity due to their high yield offering (generally between 30,000-90,000% APY). As a crypto investor, you may be enticed to join these projects at the thought of growing your investment exponentially. However, it is important to understand all the implications, and why it is extremely difficult to calculate your tax obligations on these tokens.
What is a Rebase Token?
Rebase tokens are crypto assets that have a changing circulating supply, either growing larger (more coins being created) or decreasing (coins get destroyed or 'burnt'). The increase or decrease of the market cap is spread proportionally across token holders.
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Rebase tokens automatically adjust their supply, without changing the
percentage of tokens you own. These changes are typically made as
thanks or an incentive for holding the token. Even though rebases
don’t always result in a taxable event, if you’re receiving additional
tokens it may be viewed by the ATO as income. Tracking these changes
accurately is vital for tax time, but since rebases aren’t recorded as
normal transactions they can’t be detected automatically. Despite
this, Crypto Tax Calculator makes it easy to stay compliant. All you
need to do is upload a CSV file or manually enter the rebase changes,
and we’ll automatically track the AUD value of each rebase so your
crypto taxes are accurate and stress-free.
Rebase Rewards from Staking
Olympus DAO, and many forks of this project, such as Wonderland Money, have utilized a specific method of distributing rebase rewards to token holders. Token holders in these projects are required to 'stake' their tokens and in return, are given a representative token that accumulates the rebases.
In the case of Olympus DAO, staked OHM becomes gOHM (previously sOHM) and for Wonderland Money, TIME becomes MEMO when staked. For these projects, rebases are allocated at the end of each epoch, which is usually every 8 hours (different projects have different epoch lengths). By having frequent epochs, these rebases compound rapidly and lead to displayed returns from 30,000- infinite% a year, drawing in eager investors at the prospect of making outsized returns.
Likely yes, staking-based rewards are usually taxable and staking-based rebase rewards like gOHM from Olympus DAO or MEMO from Wonderland are typically considered taxable income when received based on current ATO guidance. How much each token is taxed is subject to its fair market value in AUD at the time it was distributed.
Since rebases can occur multiple times a day, figuring out their values can be overwhelming. Although rebase events aren’t directly recorded on the blockchain and can’t be auto-detected, Crypto Tax Calculator makes it easy to stay compliant. Simply upload a CSV or add the rebase adjustments manually in-app, and we’ll automatically track the AUD value of each rebase to make your crypto taxes simple.
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Implications of Rebase Tokens for Reporting
Rebases are determined by a project’s underlying token mechanics, and are not 'distributed' via verifiable approved 'sends' or 'receives' on the blockchain. These rebases are almost impossible to track after-the-fact. If you are an owner of a rebase token (or its staked counter-part), have a look at your address on a blockchain scanner. If you look through your transactions, you will not see any incoming or outgoing transactions to account for the changes in tokens that you have seen in the wallet. For this reason, the Crypto Tax Calculator platform is unable to pull in data from these transactions, and will not be able to account for the rebases that your investments have undergone on each epoch.
Rebase tokens are currently a grey area in most tax jurisdictions, and it is difficult to determine whether the rebases would be considered income, similar to 'staking rewards' or whether the gains would only be realized in a capital gains event such as a buy or sell. To be ready to fulfil your tax obligations, we strongly suggest seeking advice from a tax professional or your tax authority to better understand how to be tax compliant given this complex financial instrument.
Yes, they can be. Since rebase tokens typically don’t show up as standard blockchain transactions they can be difficult to track and accurately report. That’s where Crypto Tax Calculator can help out. Just upload a CSV or manually enter your rebase adjustments and we’ll figure out the AUD value of each event for accurate reporting.
The information provided on this website is general in nature and is not tax, accounting or legal advice. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider the appropriateness of the information having regard to your own objectives, financial situation and needs and seek professional advice. Crypto Tax Calculator disclaims all and any guarantees, undertakings and warranties, expressed or implied, and is not liable for any loss or damage whatsoever (including human or computer error, negligent or otherwise, or incidental or Consequential Loss or damage) arising out of, or in connection with, any use or reliance on the information or advice in this website. The user must accept sole responsibility associated with the use of the material on this site, irrespective of the purpose for which such use or results are applied. The information in this website is no substitute for specialist advice.
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