Australia Crypto Income Tax Guide 2025

What is Crypto Income in Australia?

Cryptocurrency income refers to crypto received as payment for work, goods, services, or rewards. The Australian Taxation Office (ATO) treats crypto income as assessable income (ordinary income), which is taxed separately from capital gains.

Types of Crypto Income

• Salary and wages: Employment income paid in cryptocurrency
• Business income: Crypto received from carrying on a business
• Trading income: Profits from trading crypto as a business
• Freelance/contractor income: Payments for services in crypto
• Mining rewards: Cryptocurrency from mining activities
• Staking rewards: Generally ordinary income (ATO guidance)
• Airdrops: Free token distributions
• Hard forks: New coins from blockchain splits
• Referral bonuses: Exchange referral rewards
• Learn-to-earn: Educational reward programs
• Play-to-earn: Gaming rewards

ATO Treatment of Crypto Income

ATO Guidance on Cryptocurrency

The ATO has published comprehensive guidance on cryptocurrency taxation:

"If you receive cryptocurrency as payment for goods or services, the value of the cryptocurrency (in Australian dollars) is assessable income when you receive it. The value will generally be the market value at the time of receipt."

Ordinary Income vs Capital Gains

The ATO distinguishes between:

• Ordinary income: Crypto received as income - taxed at full marginal rates
• Capital gains: Profit from disposing crypto assets - 50% CGT discount available if held >12 months

Receiving crypto as payment = ordinary income (no CGT discount)

Key ATO Principles

• Crypto is property, not currency (except for tax purposes, it's treated as income)
• Market value in AUD at time of receipt
• Ordinary income is fully taxable (no 50% discount)
• PAYG withholding applies to employment income
• Cost base = market value at receipt (for future CGT events)

Employment Income vs Business Income

Employment Income (Salary & Wages)

You have employment income if you:

• Receive crypto as an employee
• Work under an employer's direction and control
• Receive a salary, wage, or allowance in crypto

Tax treatment:

• Assessable income (ordinary income)
• Subject to PAYG withholding
• Employer reports on Payment Summary or via STP (Single Touch Payroll)
• Report at Item 1 (Salary/wages) in myTax
• Medicare Levy applies (2%)

Business Income

You have business income if you:

• Carry on a business receiving crypto payments
• Work as a sole trader or contractor
• Trade cryptocurrency as a business
• Mine crypto as a business operation
• Provide crypto-related services

Tax treatment:

• Assessable income (business and professional items)
• Report at Items 13-24 (Business/professional income) in myTax
• Can claim business expense deductions
• May need to register for GST if turnover > $75,000
• May be required to make PAYG instalments

Hobby vs Business

The ATO considers whether an activity is a business or hobby:

• Profit motive: Are you seeking to make profit?
• Repetition and regularity: How often?
• Scale of operations: Commercial in nature?
• Business planning: Organized and systematic?
• Records and systems: Professional record-keeping?

When is Crypto Income Taxable?

Cryptocurrency income is assessable in the income year it is received (1 July - 30 June). The taxable amount is the market value in AUD at the time of receipt.

Receipt Date Examples

How to Calculate Income Value

Market Value in AUD

The ATO requires you to use market value in Australian dollars at the time of receipt:

• Australian exchange: Price from a reputable Australian exchange (CoinSpot, BTC Markets, Swyftx)
• International exchange: Convert USD price to AUD using RBA exchange rate
• Reasonable valuation: ATO accepts any reasonable method, consistently applied
• Price source: CoinGecko, CoinMarketCap, exchange data

Example Calculation

Scenario: You complete a freelance project and receive 1.5 ETH on 15 March 2025. ETH is trading at AUD $5,100 at the time.

• Amount received: 1.5 ETH
• Market value: $5,100 AUD per ETH
• Assessable income: 1.5 × $5,100 = $7,650
• Cost base: $7,650 (for future CGT calculation)

Income Tax Rates in Australia

Resident Tax Rates (2024-25)

Medicare Levy

Most Australian residents also pay a 2% Medicare Levy on taxable income.

• Low-income exemption: Reduced or no levy if income below thresholds
• Medicare Levy Surcharge: Additional 1-1.5% if high income and no private health insurance

Effective Tax Rates (Including Medicare Levy)

PAYG Withholding (Employment)

What is PAYG?

Pay As You Go (PAYG) withholding is the system where employers withhold tax from employee payments.

Crypto Salary and PAYG

If you receive crypto as an employee:

• Employer must withhold tax based on AUD value
• Reported via Single Touch Payroll (STP)
• Appears on Payment Summary or myGov
• Tax withheld in cash (employer converts some crypto or pays from other funds)

Example: Crypto Salary

You earn $100,000/year salary, paid 50% in crypto.

• Gross salary: $100,000 ($50,000 cash + $50,000 crypto)
• PAYG withholding: Based on $100,000 total income
• Tax withheld: Employer must withhold from cash portion (or convert crypto)
• Reported: $100,000 as salary/wages

Hard Forks and Airdrops

ATO Guidance on Airdrops

The ATO has clarified that airdrops can be:

Ordinary Income Airdrops

If you receive an airdrop as payment or reward for services:

• Assessable as ordinary income
• Market value at receipt is taxable
• Cost base = market value

Capital Gains Airdrops

If you receive an airdrop without providing services (pure promotional airdrop):

• Not ordinary income
• Cost base = $0 (you paid nothing)
• When disposed: Entire proceeds are capital gain
• 50% CGT discount available if held >12 months

Hard Forks

When you receive new coins from a hard fork:

• Not ordinary income at receipt (ATO guidance)
• Cost base = $0
• CGT event when disposed
• Entire proceeds = capital gain

Example: Airdrop Types

Promotional airdrop: You receive 500 tokens worth $200 for holding another token.

• Ordinary income: $0 (no service provided)
• Cost base: $0
• When sold for $300: $300 capital gain (50% discount if held >12 months)

Bounty airdrop: You receive 500 tokens worth $200 for completing social media tasks.

• Ordinary income: $200 (service provided)
• Cost base: $200
• When sold for $300: $100 capital gain

Crypto Salary and Employment Income

Receiving Salary in Crypto

If your employer pays you in cryptocurrency:

• Assessable as ordinary income (salary/wages)
• Subject to PAYG withholding
• Reported via STP to the ATO
• Market value in AUD = assessable amount
• Cost base = market value at receipt

Employer Obligations

• Value crypto in AUD at payment date
• Calculate and withhold PAYG tax
• Report via Single Touch Payroll (STP)
• Provide Payment Summary if required
• Withhold Superannuation Guarantee (11% on ordinary time earnings)

Example: Monthly Salary

Your employer pays you $8,000/month, 30% in Bitcoin.

• Cash portion: $5,600
• BTC portion: $2,400 (valued each month)
• Total monthly: $8,000
• PAYG withheld: Based on $8,000/month ($96,000/year)
• Cost base: $2,400 for each month's BTC

Business Income and Sole Traders

Receiving Crypto Payments

If you're a sole trader or running a business:

• Assessable as business income
• Report at Items 13-24 in myTax
• Can claim business expense deductions
• May need ABN and GST registration

Allowable Business Deductions

• Office equipment and computers
• Software and subscriptions (crypto tax software, etc.)
• Home office expenses (if eligible)
• Internet and phone (business use)
• Professional services (accountant, lawyer)
• Transaction and exchange fees
• Marketing and advertising
• Vehicle expenses (business use)
• Depreciation on assets

GST Considerations

If your turnover exceeds $75,000:

• Must register for GST
• Crypto payments = GST applies to the supply
• Market value determines GST
• File BAS quarterly or monthly

Example: Freelance Designer

You operate as a sole trader, earning $85,000 in crypto payments.

• Gross business income: $85,000
• Business expenses: $18,000
• Net business income: $67,000
• Income tax:
  • $0-$18,200: $0
  • $18,201-$45,000: $5,092 (19%)
  • $45,001-$67,000: $7,148 (32.5%)
  • Total: $12,240
• Medicare Levy (2%): $1,340
• Total tax: $13,580

Learn-to-Earn Programs

Coinbase Earn and Similar

Learn-to-earn programs reward users for educational activities:

• Coinbase Earn: Watch videos, complete quizzes
• Binance Learn & Earn: Educational rewards
• CMC Earn: CoinMarketCap rewards

Tax Treatment

Since you perform tasks to receive crypto:

• Assessable as ordinary income
• Market value at receipt
• Report at Item 24 (Other income) in myTax
• Cost base = market value

Example: Coinbase Earn

You complete 8 Coinbase Earn lessons in 2024-25:

Report $51 as other income at Item 24.

Play-to-Earn Gaming

What is Play-to-Earn?

Play-to-earn games reward players with cryptocurrency:

• Axie Infinity: Earn SLP and AXS
• Decentraland: Earn MANA
• The Sandbox: Earn SAND
• Gods Unchained: Earn GODS and NFT cards
• Splinterlands: Earn DEC and cards

Tax Treatment

Casual Players

• Ordinary income when rewards are received
• Report at Item 24 (Other income)
• Market value at receipt
• Cost base = market value

Professional/Business Players

• Business income if playing systematically for profit
• Report at Items 13-24 (Business)
• Can claim expenses (game assets, equipment)
• May need ABN/GST

Example: Axie Infinity

Casual player: You play occasionally and earn $600 AUD in SLP.

• Assessable income: $600
• Report at Item 24
• Tax (21% rate): $126

Professional player: You play daily and earn $40,000.

• Business income: $40,000
• Expenses: $6,000 (Axies, computer, etc.)
• Net income: $34,000
• Report at Items 13-24

Referral Bonuses and Promotional Rewards

Exchange Referral Programs

Many exchanges offer crypto for referring new users:

• Coinbase referral rewards
• Binance referral commissions
• Swyftx referral bonuses
• CoinSpot referral rewards

Tax Treatment

• Assessable as ordinary income
• Market value at receipt
• Report at Item 24 (Other income)
• Cost base = market value

How to Report on Tax Return

myTax (Individual Tax Return)

Item 1: Salary and Wages

For employment income paid in crypto:

• Pre-filled from STP data
• Includes AUD value of crypto salary
• PAYG withheld shown

Items 13-24: Business Income

For business or professional income:

• Report gross crypto income (in AUD)
• Deduct allowable expenses
• Net business income flows to total income

Item 24: Other Income

For miscellaneous income (airdrops, referrals, learn-to-earn):

• Enter total AUD value
• Add description: "Cryptocurrency income"

Cost Base After Receiving Income

When you receive crypto as income, your cost base equals the market value at receipt. This prevents double taxation.

Example: Complete Tax Cycle

Step 1: Receive Income

• 1 March 2025: Receive 3 ETH as payment, ETH = $5,000 AUD
• Assessable income: 3 × $5,000 = $15,000
• Cost base: $15,000 (or $5,000/ETH)

Step 2: Sell Later

• 1 August 2025: Sell 3 ETH when ETH = $5,500 AUD
• Proceeds: 3 × $5,500 = $16,500
• Cost base: $15,000
• Capital gain: $16,500 - $15,000 = $1,500
• CGT discount: Not available (held <12 months)
• Taxable gain: $1,500 (added to income)

Example Scenarios with Calculations

Scenario 1: Crypto Salary Employee

You work for a tech company earning $90,000/year, 20% paid in Bitcoin.

• Cash salary: $72,000
• BTC salary: $18,000
• Total gross: $90,000
• Income tax:
  • $0-$18,200: $0
  • $18,201-$45,000: $5,092
  • $45,001-$90,000: $14,625
  • Total: $19,717
• Medicare Levy (2%): $1,800
• Total tax: $21,517

Scenario 2: Freelance Blockchain Developer

Self-employed developer earning $130,000 in crypto payments.

• Gross business income: $130,000
• Business expenses: $22,000
• Net business income: $108,000
• Income tax:
  • $0-$18,200: $0
  • $18,201-$45,000: $5,092
  • $45,001-$108,000: $20,475
  • Total: $25,567
• Medicare Levy (2%): $2,160
• Total tax: $27,727

Scenario 3: Mixed Crypto Income

You have multiple income sources in 2024-25:

Record Keeping Requirements

ATO Requirements

You must keep records for 5 years from the date you lodge your tax return.

What to Track

• Date and time of receipt
• Type of income (employment, business, other)
• Amount in crypto
• Market value in AUD at receipt
• Source (employer, client, exchange, protocol)
• Purpose (service provided, employment, etc.)
• Wallet addresses
• Transaction IDs

Documentation to Keep

• Payment summaries or STP data
• Invoices and contracts
• Wallet transaction history
• Exchange statements
• Screenshots of airdrops, earn programs
• Price data sources
• Business expense receipts

Tools for Tracking

• Koinly - Excellent Australian tax reports
• CryptoTaxCalculator - Australian-focused
• CoinTracker - Good income tracking
• TokenTax - Complex scenarios

Common Mistakes to Avoid

1. Treating all crypto as capital gains: Income is taxed at full rates, not 50%
2. Not reporting crypto income: All assessable income must be reported
3. Wrong item on tax return: Use correct item (1 for salary, 13-24 for business, 24 for other)
4. Forgetting cost base: Cost base = market value at receipt
5. Not tracking small amounts: All income is assessable
6. Using wrong exchange rate: Use AUD value at time of receipt
7. Not claiming business expenses: Deductions reduce taxable income
8. Poor record keeping: ATO can audit up to 5 years
9. Ignoring PAYG obligations: Employers must withhold tax
10. Not understanding airdrop rules: Service airdrops are income; promotional may not be

FAQs

Is all crypto income taxable in Australia?

Yes. Cryptocurrency received as payment, salary, or reward is assessable income taxed at ordinary income rates.

Do I pay income tax or capital gains tax on crypto?

Ordinary income tax when you receive crypto as income (full rates). Capital gains tax when you dispose of crypto (50% discount if held >12 months).

Are airdrops taxable in Australia?

Service/bounty airdrops (where you complete tasks) are assessable income. Promotional airdrops (no service) are not income, but have $0 cost base (entire proceeds are capital gains when sold).

Do I need PAYG withholding for crypto salary?

Yes. Employers paying in crypto must withhold PAYG tax based on the AUD value and report via Single Touch Payroll.

Can I offset crypto losses against income?

No. Capital losses can only offset capital gains. Business losses can reduce business income if you're carrying on a business.

What if I don't report crypto income?

The ATO can assess penalties and interest for failure to report. Australian exchanges report to the ATO, making unreported income detectable.

How do I value crypto if there's no AUD market?

Use a reasonable method: convert USD price to AUD using RBA exchange rate, or use a reputable price source. Document your method.

What about staking rewards?

The ATO considers staking rewards as assessable income (ordinary income) when received. Cost base = market value at receipt.

Can my employer pay me entirely in crypto?

Yes, but they must value it in AUD, withhold PAYG tax, and meet all employment obligations including superannuation.

Do I need an ABN to receive crypto payments?

If you're carrying on a business, yes. You should have an ABN and may need GST registration if turnover > $75,000.

Tools & Resources

Crypto Tax Software

• Koinly - Best for Australian taxes, ATO-compliant
• CryptoTaxCalculator - Australian-focused, excellent
• CoinTracker - Good income tracking
• TokenTax - Complex scenarios
• ZenLedger - Affordable option

ATO Resources

• ATO Crypto Asset Investments
• ATO Crypto Currency Guidance
• Capital Gains Tax Calculator

Final Thoughts

Cryptocurrency income in Australia is assessable income taxed at ordinary rates (no 50% CGT discount). Understanding the distinction between ordinary income and capital gains is critical for proper tax compliance.

Key takeaways:

• Ordinary income at full rates when received
• Cost base = market value (prevents double tax)
• PAYG withholding for employment
• Business expenses are deductible
• Keep records for 5 years

Most Australians earning crypto income will benefit from crypto tax software like Koinly or CryptoTaxCalculator to automate tracking and generate ATO-compliant reports. For significant income or complex situations, consult an Australian crypto tax accountant.