Understanding the tax implications of Cryptocurrency and NFTs

In today’s digital world, more and more Australians are engaging with Cryptocurrency and Non-Fungible Tokens (NFTs), and we are receiving a growing number of questions around the tax implications of investing, trading, mining, or earning income through digital assets.

Whether you are dealing in Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE), or trading NFTs, these activities are treated the same as other investment assets and must be reported in your annual income tax return. The ATO has published clear guidelines on the income tax implications of crypto-related activity, and Stones Sharp is here to help you understand and apply those rules with confidence.

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Cryptocurrency and NFTs as Investment Assets

Over the past few years, the popularity of cryptocurrency and non-fungible tokens (NFTs) has skyrocketed, driven by investors chasing gains and exploring the utility of digital assets. Your original intention when acquiring crypto or NFTs, and the frequency of your transactions, plays a critical role in how the ATO views your activity.

If you’re a long-term investor, your profits may fall under Capital Gains Tax (CGT) rules. Subject to eligibility, you may be able to access the general 50% CGT discount if holdings meet certain criteria, also known as the 10,000 Crypto Law.

If your activity resembles a profit-making undertaking, like mining, frequent trading, or staking, then earnings are more likely to be assessed as business income, and an Australian Business Number (ABN) may be required.

We also work with clients earning income in cryptocurrency from international sources (e.g. trading platforms, proprietary firms, or DeFi protocols including yield farming, liquidity pools, and staking rewards). We can help you determine how such income should be classified and reported under Australian tax law.

Using Cryptocurrency in Business Transactions

Currently, the ATO takes the view that transacting with any digital currency is the same as a barter type arrangement. Even though Cryptocurrency is not a recognised legal tender, it is treated in the same way for taxation purposes.

If you receive crypto as payment for goods or services, you must include the fair market value in AUD as part of your assessable income. Similarly, when you use cryptocurrency to purchase business-related items, the deductible amount is based on the market value of what you’ve bought.

Need Assistance…

Contact the team at Stones Sharp to prepare your income tax return incorporating Cryptocurrency and Non-Fungible Token trading and investing to ensure that you are paying the correct and minimal amount of tax on any trading, coin swap, mining, farming or investing.

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Dealing with Crypto Platform Collapses and Loss Events

With the volatility of the digital asset ecosystem, some platforms, such as Celsius, have collapsed or entered bankruptcy. If you’ve experienced platform-related losses, Stones Sharp can help you understand the tax implications and determine whether any losses can be claimed under ATO guidelines.

We assist with crypto tax software including Koinly, CoinTracker, and other platforms, ensuring accurate reporting. If you are unsure whether your report accurately reflects your activity or your losses, we can help assess and clarify.

Crypto in Personal Transactions and Hobbies

If your crypto or NFT dealings are deemed a hobby or involve personal use assets, there may be different tax outcomes, including non-commercial loss rules that limit access to losses incurred, and possible exemptions. However, the ATO is increasingly vigilant about hobby vs. business activity distinctions, so it is essential to get professional guidance.

Self-Managed Super Funds (SMSFs) and Cryptocurrency

We work with clients exploring cryptocurrency investment through their Self-Managed Super Funds (SMSFs). This area comes with strict compliance obligations and reporting standards. Our team can assist in ensuring that your SMSF remains compliant while engaging with digital asset exposure.

Need Personalised Guidance?

Want to discuss tax strategies for crypto gains or withdrawals?

Struggling to reconcile your activity across multiple wallets or platforms?

Concerned about prior-year income tax returns and want to get it right moving forward?

At Stones Sharp, we stay up to date with the ATO’s evolving position on cryptocurrency, NFTs and digital assets, so you don’t have to. We assist clients with a wide range of cryptocurrency tax issues and provide expert support to ensure you are meeting ATO requirements, and not paying more tax than necessary.

Get Cryptocurrency Tax Assistance

Contact the team at Stones Sharp to prepare your income tax return, or to discuss the tax implications of any trading, coin swap, mining, farming, or investing.

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I have had the Pleasure of dealing with Shane and the rest of the crew at Stones Sharp for a number of years now and can not fault them. They have always been professional and prompt to deal with, as well as giving me the best advice possible for my tax and other financial needs. Can not recommend the Team at Stones Sharp enough.

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09:00 14 Feb 19

Over 20 years minimum hassle starting with Ken and then with Shane.

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23:07 06 Sep 18

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03:50 17 Oct 18

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13:26 17 Aug 18

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00:09 25 Nov 17

I have been a client of Shane Borg for some 20 plus years. Over this time I have always sought Shane’s advice for my business, investment ventures, taxation planning and obligations for my ventures and self-managed superannuation fund. Shane provides honest and directional advice that you can utilise within your decision making processes. Shane and the team at Stones Sharp are more than tax accountants, they are akin to business partners assisting me in wealth creation and business management advice…. They truly care about me and my family.The team at Stones Sharp are both proactive and responsive while they continue to communicate regularly. I highly recommend Shane and the Stones Sharp team.

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10:26 21 Sep 20

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22:50 05 Sep 21

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00:11 16 Dec 21

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23:28 01 Apr 24

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22:51 15 Sep 23

I highly recommend Stones Sharp, we have been using them for a few years now. Shane and, all the team at Stones Sharp are fantastic professionals. They have been helping with our, tax returns and, our cryptocurrency taxes. The team are all friendly, supportive and offer great valuable advice.

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22:44 26 Jan 23

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12:12 01 Jul 24

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02:20 10 Jul 24

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12:37 05 Mar 26

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23:58 06 Jul 25

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Toscano Plumbing

03:54 15 Nov 17

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Cryptocurrency Taxation & Accounting Services