Understanding how CGT works with crypto is one of the most valuable skills you can develop as an investor in Australia. A few hours spent learning the rules now could save you thousands in tax bills later. Let's walk through what you need to know.

Crypto and capital gains tax in Australia: what you need to know

Capital gains tax (CGT) is not a separate tax in Australia. Instead, any capital gains you make get added to your assessable income and taxed at your marginal tax rate. For crypto investors, this matters a lot. Back in 2014, the ATO ruled that Bitcoin and similar crypto assets qualify as CGT assets, meaning you must declare gains and losses when you sell or dispose of them.

How CGT works with crypto

Your net capital gain for a year equals your capital gains minus your capital losses. If your losses exceed your gains, you have a net capital loss. This loss can't reduce your regular income (like salary), but you can carry it forward indefinitely to offset gains in future years.

The key insight: losses are valuable. Many crypto investors focus on avoiding losses, but the ability to offset gains with losses is a tax strategy worth planning for.

What triggers a CGT event

Several actions trigger CGT events when holding crypto. Selling crypto for AUD is the obvious one. Trading one crypto for another (swapping BTC for ETH) counts too, because you're disposing of the BTC. Using crypto to pay for goods or services creates a CGT event at the market value on that day. Even giving crypto as a gift triggers CGT, based on the asset's market value at the time.

Moving crypto into certain DeFi protocols may also trigger a disposal, though this depends on the specific protocol. Check with your accountant or use software like Summ to track edge cases accurately.

What doesn't trigger CGT: buying crypto with AUD (this just sets your cost base), transferring crypto between your own wallets, or receiving staking rewards (those count as income instead).

Calculating capital gains and losses

The math is straightforward. Your capital gain equals the capital proceeds (what you sold it for) minus the cost base (what you paid for it).

Example: You buy 1 ETH for $2,000 AUD. Eighteen months later, you sell it for $3,500 AUD. Your capital gain is $1,500.

If you've traded the same asset multiple times, you need to track each purchase separately. The ATO's default method is FIFO (first in, first out), meaning the first tokens you bought are treated as the first ones you sold. You can apply for a different method, but FIFO is the baseline assumption.

Capital losses work the same way. Buy 1 BTC for $80,000 AUD, sell it for $60,000 AUD, and you have a $20,000 capital loss. You can use this loss to offset gains in the same year or carry it forward to future years.

The wash sale trap

One mistake to avoid: selling an asset to lock in a loss, then immediately buying it back. The ATO watches for this pattern. If they catch you doing it, they may disallow the loss and add penalties on top. If you want to crystallise a loss, be prepared to stay out of that asset for a reasonable period, or switch to a different one.

The 50% CGT discount

Here's where Australian crypto tax gets interesting. If you hold a crypto asset for more than 12 months before selling, you can reduce your capital gain by 50 percent. Only the remaining 50 percent gets added to your assessable income and taxed.

Example: You buy ETH for $2,000 AUD, hold it for 18 months, then sell for $5,000 AUD. Your capital gain is $3,000. With the 50% discount, only $1,500 is included in your assessable income and subject to tax.

If your marginal tax rate is 39 percent (including Medicare levy), that discount saves you $585 on this single trade. Across a portfolio of investments held for more than 12 months, the savings add up fast. This is one of the most valuable tax strategies available to Australian crypto investors.

How to report crypto to the ATO

The 2025-26 financial year runs from July 1, 2025 to June 30, 2026. If you're a salaried employee lodging your own return, the deadline is October 31, 2026. Tax agents typically have later deadlines.

You lodge your crypto activity through myGov. Navigate to ATO > Tax > Income Tax > Lodgments, then start your return. Declare all crypto gains and losses in the same section you'd use for shares or other capital assets.

If you're using software like Summ, it generates a full ATO-compatible report with summary figures you can enter directly into MyTax, plus a detailed record for your own files. This takes the guesswork out of what numbers to report.

Keep detailed records of every transaction: the date, the asset, the quantity, the price in AUD, and the transaction type (sale, trade, payment, gift). The ATO can ask for these records up to five years after lodging your return.

Next steps

CGT rules are the same whether you're trading BTC or ETH, or using a DeFi protocol. The logic is simple: track your cost base, calculate your gains and losses, apply the 50% discount if you've held the asset longer than 12 months, and report the numbers to the ATO.

Getting this right early saves you from nasty surprises at tax time. It also helps you make smarter investment decisions. When you know that holding an asset for 12 months can halve your tax bill, it changes how you approach selling.

If you're managing multiple trades across different exchanges, tracking everything manually becomes error-prone. Summ handles the math, generates your ATO report, and keeps everything organised. You can focus on your investment strategy instead.

Ready to get your crypto tax sorted? Sign up to Summ and upload your transaction history. We'll calculate your gains, losses, and tax position, then generate a report ready for your accountant or the ATO.