With the ATO cracking down on crypto, it’s important you know your Australian crypto tax rates for 2023. Understanding the ATO stance on crypto taxes helps ensure you don’t pay too little (or too much!) in taxes - and avoid harsh penalties. Learn about the 2023 crypto tax rates in Australia before the deadline on the 31st of October 2023.
Do you know what the Bitcoin tax rate in Australia is? What about other crypto tax rates for popular coins like BNB, ADA or ETH?
You need to. The ATO have explicitly stated they’re coming after crypto investors who aren’t paying their fair share in crypto taxes. They’ve announced they’re working with crypto exchanges based in Australia to share customer information and have already sent out more than 350,000 crypto tax warning letters to investors they believe have capital gains. It's highly likely we'll see more letters heading out to crypto investors in the coming months as the tax deadline nears.
All this to say, it’s important you understand your crypto tax rate, as well as calculate and report your crypto taxes to ATO. We're covering all you need to know about crypto tax rates in our guide, including ATO tax rates 2023, how to calculate capital gains and the tax you'll pay and how a Capital Gains ax calculator like Koinly can help.
ATO crypto tax rates 2021 - 2022
There is no specific ATO crypto tax rate - instead your crypto is taxed as either a capital gain or income and the tax rates are based off the Income Tax rate brackets. If you've made a short-term capital gain, or income, you'll pay the same rate of tax as you would on regular income. Meanwhile, if you've made a long-term capital gain, you'll get a 50% Capital Gains Tax discount. Here's the Income Tax rate brackets for the current financial year:
ATO Income Tax rate brackets 2021 - 2022
Your crypto tax rate is based off your total annual income. So it will be the same as the highest tax band you fall into, or if it pushes you into the next tax rate bracket then the next rate instead. You can use the table below to figure out your Income Tax rate bracket:
Australia uses a progressive tax rate system. This means you won’t pay the same flat rate on all your earnings. Instead, as you earn more, you’ll pay more tax but only on earnings that fall into the higher Income Tax rate brackets.
It’s also important to note that these tax rate brackets do not include the 2% Medicare levy.
How to calculate your crypto taxes
So now you know your crypto tax rate - you need to know how to calculate your crypto taxes so you know how much you'll pay. This all depends on whether your specific transaction is seen as a capital gain or as income. We'll cover both.
Calculating crypto Capital Gains Tax
To calculate the amount of Capital Gains Tax you'll pay, you need to figure out how large your capital gain is for every taxable capital gains transaction (so anytime you sold, swapped, spent or traded crypto).
1. Cost Basis
If you're not using a crypto capital gains tax calculator, you need to start by figuring out your cost basis for each asset. Your cost basis is simply how much it cost you to acquire your crypto plus any fees, like buy or sell fees. If you otherwise acquired your crypto - like as a gift - use the fair market value of the crypto on the day you received it instead.
Once you have your cost basis, subtract your cost basis from your sale price to calculate whether you have a capital gain or loss. If you otherwise disposed of your asset - like by trading it or spending it - use the fair market value of your crypto in AUD on the day you disposed of it instead.
This difference in value after you've subtracted your cost basis is your capital gain or loss. If you have a profit, you've got a capital gain and you'll need to pay Capital Gains Tax on that transaction. If you have a loss, you have a capital loss and you can offset this against your net capital gain for the year to reduce your overall tax bill (more on this in a minute).
You need to do this calculate for every taxable transaction you've made in the financial year you're reporting on. In other words, any time you sold, spent, traded or gifted crypto between the 1st of July 2021 and the 30th of June 2022 - you'll need to do the above calculation.
It's a lot of work if you're an active investor... and that's not all.
2. Separate short-term and long-term gains
Your short-term gains and long-term gains are taxed differently in Australia, so it's important to separate them for your ATO tax return. Your short-term gains will be taxed the same as regular income - at the full tax rate. Meanwhile, your long-term capital gains (where you've held crypto for more than a year before selling) receive a 50% Capital Gains Tax discount.
2. Calculate your net capital gain and loss
You pay tax on your net capital gain in Australia. Your net capital gain is:
- Your total capital gains
- Less any losses
- Less any discount you are entitled to on your gains.
So you can start by adding up your total capital gains for the financial year - so any profit from selling, trading, spending or gifting crypto from the 1st of July 2021 to the 30th of June 2022.
Then subtract any capital losses. Start by subtracting any capital losses you've carried forward from previous tax years if applicable. If not, subtract any capital losses from this financial year - so any loss you've made as a result of selling, trading, spending or gifting crypto.
You can pick which capital gains to subtract your losses from. In other words, if you have short-term capital gains that aren't eligible for the 50% discount, subtract from these gains first. This will give you the lowest tax bill.
4. Apply the 50% Capital Gains Tax discount
In general, all of your long-term capital gains where you've held the asset for more than 12 months are eligible for a 50% capital gains discount.
So you'll only pay tax on half of your capital gains from these assets. So take your long-term capital gains total and halve it. Now factor this calculation into your net capital gain.
Regardless of whether you end up with a gain or a loss after all these calculations, you need to report it in your annual tax return. You'll pay tax on the gain at your marginal Income Tax rate, so let's look at an example.
You made $11,000 in gains from your crypto investments throughout the 2021-2022 financial year, as well as a total loss of $1,000.
$3,000 of your capital gains were long-term gains and $8,000 of your capital gains were short-term gains.
Subtract your total capital loss from your short-term gains, leaving $7,000.
Halve your long-term capital gains, leaving $1,500.
$7,000 + $1,500 = $8,500. This is your net capital gain.
To figure out your tax rate, you need to figure out what marginal Income Tax rate bracket you sit in. You earned $60,000 from your job, plus your $8,500 net capital gain - giving you a total annual income of $68,500.
This puts you in the 32.5% tax rate bracket, so this is your crypto tax rate.
32.5% of $8,500 = $2,762.5. This is the amount of Capital Gains Tax you'll pay.
Calculating crypto Income Tax
Thought you were done? Wrong. If you've got income - like from airdrops, staking rewards or earning new coins or tokens via DeFi protocols - you'll need to pay Income Tax on this too. Fortunately, the calculations are a lot more straight forward than for capital gains.
1. Identify your crypto income
Start by identifying all your taxable transactions that could be considered additional income by the ATO. You'll need to know the date of any coins or tokens on the day you received them. Learn more about how crypto is taxed as income in our Australia Crypto Tax Guide.
2. Identify the fair market value of tokens
Now identify the fair market value in AUD of any tokens on the day you received them. If you're not using crypto tax software, this means you'll need to use a reliable crypto price aggregator and go back through historic market prices.
3. Calculate your total additional income from crypto
Once you have figures for all your crypto income throughout the financial year, add these up to give yourself a total figure. This is your additional income and you'll pay tax based on your marginal income tax rate. Let's look at an example.
You earn $60,000 from your job. In this financial year, you've also made $10,000 from crypto income from a variety of DeFi activities.
$60,000 + $10,000 = $70,000.
This puts you in the $45,001 - $120,000 tax rate bracket. Your crypto tax rate will be 32.5%, so you'll pay a total of $3,250 in tax on your crypto income.
When to file Australian crypto taxes
The Australian tax deadline is the 31st of October 2022. You need to file taxes for the previous financial year of July 1 2021 to June 30th 2022. If you're filing through an accountant, the deadline is the 15th of May 2023. Here's the tax deadlines you need to know:
ATO Tax Deadlines 2021 - 2022
The Australian tax year runs from the 1st of July 2021 to the 30th of June 2022.
1st July 2021: 2021 - 2022 tax year starts.
30th June 2022: 2021 - 2022 tax year ends.
1st July 2022: 2022 - 2023 tax year starts.
31st October 2022: Deadline for filing your tax return for 2021 - 2022 tax year.
15th May 2023: If you're using a registered tax agent to file your taxes, this is the typical deadline for registering your 2021 - 2022 tax return.
Koinly is a crypto Capital Gains Tax calculator
Using crypto tax software like Koinly helps you avoid all of the maths above. Koinly can calculate your capital gains and losses for you (both short and long-term), as well as the fair market value in AUD of any crypto income on the day you received it. All you need to do is sync the exchanges, wallets and blockchains you use and Koinly will do the rest, generating you a variety of Australian tax reports like the myTax report, Capital Gains Tax report and Complete Tax report.
All you need to do once you have your report is file as you usually would, using either myTax or paper forms. Done!