The ATO has been vocal about their intention to crack down on Australian cryptocurrency users who are trying to avoid paying taxes, so now’s the time to understand your tax obligations and how to calculate them.
Australian Tax Rates
First up, the most important thing to remember as an Australian crypto user is that the amount of tax you pay on your crypto activity will depend on what Income Tax bracket you fall into. These tax brackets have been updated as of last year, and are now as follows:
|$0 – $18,200||0%||Nil|
|$18,201 – $45,000||19%||19c for each $1 over $18,200|
|$45,001 – $120,000||32.5%||$5,092 plus 32.5c for each $1 over $45,000|
|$120,001 – $180,000||37%||$29,467 plus 37c for each $1 over $120,000|
|$180,001 and over||45%||$51,667 plus 45c for each $1 over $180,000|
Your crypto gains are to be included in your overall income declaration for the financial year. For example, if John earns $110,000 AUD from his job as a Software Developer, but also made a profit of $15,000 AUD, this would bring his income total to $125,000 AUD. As a result, his tax payable would be $29,467 + 37c for each $1 over $120,000.
How to calculate your crypto Capital Gains value
In order to calculate how much capital gains you’ve made from your crypto activity, you’ll need to establish a cost basis for each and every transaction. A cost basis is the amount it cost you to acquire your crypto: for example, purchasing 1 ETH for $3,000 would establish a cost basis of $3,000. If you acquired your crypto through other means, your cost basis would be the fair market value of the crypto asset at the time of receipt. Cost bases can be tracked manually, or you can use a software like CryptoTaxCalculator to automate this process for you! Once you have your cost basis established, you can use these to subtract from the sale price of your crypto asset. The difference between these two values gives you your capital gain (or loss).
For example, John purchases 1 ETH for $3,000 AUD. He then sells his 1 ETH for $3,900 AUD. His cost basis is $3,000 AUD, while his capital gain is $900 AUD.
The ATO has a clear list of guidelines for what crypto activity currently incurs Capital Gains Tax, and is viewable here. This list includes things such as exchanging crypto for crypto, converting crypto for fiat currency and more.
How to calculate your crypto Income value
In order to calculate your crypto-related income in Australia, you’ll need to first understand what type of crypto gains are classified as income by the ATO. At the time of writing this article, the ATO classifies airdrops, staking rewards and DeFi yield projects as income-generating activities. You can view their detailed explanation here.
Once you’ve established what transactions fall into the ATO’s income classification, you will have to establish the fair market value on the day you received the crypto. You will need to repeat this process for each of the crypto income streams in order to reach a total crypto income value.
For example, John received an ENS airdrop of 1,000 ENS tokens in July 2021. At the time of receipt, they were worth $10 AUD each. John will need to declare $10,000 AUD in income from this airdrop in his Individual Tax Return to the ATO.
Once again, this process of tracking and establishing fair market value for each asset can be done manually, or you can use a platform like CryptoTaxCalculator to make things simpler. Our algorithm will auto-categorize the majority of transactions for you, and gives you the ability to re-classify things as ‘staking rewards’, ‘airdrops’ etc.
How does CryptoTaxCalculator help you calculate your Capital Gains and Income tax as an Australian?
As mentioned earlier in this article, CryptoTaxCalculator can help you with the heavy lifting associated with tracking cost bases, fair market values and aggregate all of this for you. You’ll need to import data from any relevant sources (e.g. a wallet address, an exchange), and our software will be able to aggregate your transactions, cost bases and values for you. Our dashboard gives you a view of overall cost base, unrealised gains and balance, while our reports give you a detailed overview of long and short-term gains, losses, income and more. Make life easier for yourself, try us out!
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Strategy and Communications Manager
Samara has been working in the crypto industry for the last 3 years and is passionate about helping other crypto users learn about the tax implications of their trading activity.