Buying crypto and holding it is the simple part. It's when you use crypto that the tax surprises start, because the ATO treats most uses as disposals. Wrapping a token, depositing into a DeFi protocol, or buying something with crypto can each trigger a CGT event, even though it rarely feels like selling.

This is part of our guide series alongside Acquiring crypto and Disposing of crypto, under the full Australian crypto tax guide.

The core rule: using crypto usually means disposing of it

A CGT event happens whenever you stop owning a crypto asset, and "stop owning" is broader than "sell for dollars". Exchanging one token for another, spending crypto, and handing tokens to a protocol that gives you a different token back all count. The gain or loss is worked out from the asset's AUD market value at the time.

Spending crypto and the personal use asset exemption

Buying goods or services with crypto is a disposal. There's one narrow carve-out: the personal use asset exemption, where gains can be disregarded if the crypto cost less than $10,000 and was acquired and used mainly to buy things for personal use or consumption.

The ATO applies this narrowly. The longer you hold crypto, the less likely it qualifies, and if you acquired it as an investment (which is how most people hold it), the exemption doesn't apply at all. Buying BTC on Friday to pay for a purchase on Saturday might qualify. Spending BTC you've held for two years while it appreciated almost certainly doesn't.

DeFi: the ownership trap

The ATO's DeFi guidance turns on whether your tokens change hands. Deposit into a lending protocol or liquidity pool and receive a different token back (an LP token, a receipt token, an interest-bearing derivative), and the ATO's view is you've disposed of your original tokens. That's a CGT event going in, and another one coming out when you redeem.

On top of that, rewards and interest earned from DeFi are ordinary income at their AUD value when you receive them, the same treatment as other earned crypto.

Wrapped tokens

Wrapping and unwrapping is a CGT event in the ATO's view, even at 1:1. Converting ETH to WETH means disposing of your ETH at market value; the WETH starts a fresh cost base and a fresh 12-month clock. For the detail on what the ATO's guidance says and where it came from, see Staking, wrapped tokens and DeFi: the ATO's rules.

Quick reference

How does Summ handle DeFi and wrapped tokens?

Summ reads your on-chain activity, categorises wrapping, pool entries and exits, and reward income automatically, values everything in AUD at the time it happened, and rolls it all into your CGT and income totals. DeFi-heavy wallets can produce hundreds of small disposals in a year; the point of automating it is that you don't reconstruct them by hand.

FAQ

Is wrapping a token really taxable even though I still control the value?
Under the ATO's published guidance, yes. Wrapping is treated as exchanging one asset for another, which is a disposal at market value. If your cost base and the wrap price are close, the gain may be small, but the event still needs to be in your records.

How does the personal use exemption work if I hold crypto for months first?
The longer the gap between acquiring and spending, the harder it is to argue the crypto was acquired for personal use rather than investment. The exemption is judged at acquisition, not at the moment you spend.

Do transaction and gas fees count for anything?
Yes. Fees connected to acquiring or disposing of crypto generally form part of the cost base or reduce your proceeds, so they trim the gain. Summ captures them automatically.

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This article is general information, not tax advice. For your specific situation, speak to a registered tax agent.