DeFi Tax Australia (2026 Guide)
The ATO is clear that your DeFi transactions are taxable, but the tax you'll pay all depends on your transactions and holding period. Learn everything you need to know in our 2026 Australia DeFi Tax Guide.
How is DeFi taxed in Australia?
The ATO has guidance on DeFi tax, stating that your DeFi transactions may be subject to either capital gains tax or income tax, depending on the nature of the transaction. We'll cover all the common transactions and everything you need to know in depth.
How does the ATO tax DeFi?
DeFi transactions will create capital gains tax events (CGT) or assessable income, depending on the specific protocol and how it works.
In the simplest terms, if you're earning new tokens, this is classed as assessable income. If you're disposing of tokens by trading them in protocols, this is classed as a CGT event.
| Transaction | Tax Applicable |
|---|---|
| Trading tokens on dexes | CGT |
| Adding/removing crypto from liquidity pools | CGT |
| Earning new tokens liquidity mining | Income tax |
| Staking rewards | Income tax* |
| Yield farming | Income tax* |
| Lending platforms | CGT* |
| Crypto margin trading | CGT |
| Crypto derivatives | CGT |
| Selling NFTs you created | Income tax |
| Selling NFTs you bought | CGT |
| Trading NFTs | CGT |
| Play to earn rewards | Income tax |
Let's look at different transactions in more depth.
DeFi Capital Gains
If your transaction is seen as a disposal of a capital asset, then this creates a CGT event, and any profit is subject to capital gains tax. Disposals of a capital asset include:
Selling crypto for AUD or other fiat currencies.
Trading crypto for another crypto, including liquidity pool tokens.
Spending crypto on goods or services (unless the personal use asset rule applies).
Remember, Australian gains held longer than 1 year receive a 50% CGT discount, so holding is a good idea.
Trading on dexes
Trading tokens on dexes? Whether you're into ERC-20 tokens, BEP-20 tokens, or even NFTs, it's all the same from a tax perspective. Trading one crypto for another is a disposal, and profits are subject to capital gains tax.
Adding/removing liquidity from pools
As you're not disposing of an asset, you might think of adding and removing liquidity from various DeFi protocols as more akin to a transfer, but it's not quite the case because in almost all instances, you'll receive a token in return representing your stake in the pool, known as liquidity pool tokens. Similarly, when you want your asset back, you'll swap your LP tokens back for your original asset and sometimes the rewards you've earned.
The ATO says these transactions are disposals and any gain is subject to CGT.
Rewards from pools and earning interest from DeFi
The way you're taxed on rewards from staking, lending, or liquidity pools all depends on how that specific DeFi protocol works and how your rewards are paid out. There are two main ways these protocols work.
You add to a pool, and you receive tokens in return. Your rewards from your capital in the pool aren't paid out in the form of new tokens; instead, your LP tokens accrue value. You'll only realise that gain when you remove your capital from the pool and trade your tokens back. This would be a disposal, and therefore, profits are subject to capital gains tax.
You add to a pool and receive tokens in return. You receive new tokens as a result of your capital in the pool. These new tokens are similar to interest income, and as such, you'll need to pay income tax based on the fair market value of the new tokens in AUD on the day you received them.
DeFi loans
The tax on DeFi loans will depend on whether you're borrowing or lending crypto.
Borrowing crypto doesn't seem like a taxable event, but it might be depending on how your specific DeFi protocol works. If you need to put up collateral in order to loan crypto and you receive tokens in return representing your collateral, this would be a disposal, and any gain is subject to CGT.
Your interest payments could be viewed as spending crypto, which would be a disposal and subject to CGT. However, these may be deductible as costs depending on the purposes of your loan (what you spent it on) and the volume you're trading at.
Meanwhile, if you're lending crypto, chances are you'll similarly receive tokens in return representing your loaned crypto. This again is a disposal, and profits will be subject to CGT.
The tax on the interest you earn will depend on how your protocol pays out. Earning new tokens? Income tax. Tokens that accrue value? CGT.
Margin trading
Provided you’re seen to be trading as an individual investor, you’ll pay CGT on profits from margin trades, derivatives, and other CFDs. So you don’t pay tax when you open a position, you’ll pay tax when you close your position and realise a capital gain.
In the instance of liquidation, for example, through a margin call, this is a disposal from a tax perspective and needs to be reported to the ATO.
Transaction fees
Transaction fees are tax-deductible for capital gains. What we mean by this is any time you have to pay a fee to conduct a transaction to buy, sell, or swap a crypto asset, you can add this to your cost basis (what it costs you to acquire the asset). This will reduce any capital gain later on by giving a more realistic view of the asset cost.
Transfer fees
Transfer fees are more problematic from a tax perspective. It’s not clear whether transfer fees — for example, moving tokens from one wallet to another — can be added to your cost basis. This could be viewed as a maintenance cost, which you cannot add to your cost basis.
The cautious approach to this is to treat transfer fees as a disposal and subject to CGT.
Wrapping tokens
When you ‘wrap’ a token, you’re exchanging one token for another. The updated ATO DeFi guidance is clear that this is a disposal and any gain is subject to Capital Gains Tax.
DeFi Income
The ATO is clear that DeFi rewards are similar to interest income. Therefore, it's taxed as assessable income based on the fair market value of your tokens.
Let's take a look at the most common DeFi transactions and when they might be taxed as income under the current ATO guidance.
Staking as part of a PoS mechanism
Many DeFi protocols are built on proof-of-stake blockchains - like Cardano, Avalanche, and Terra. In order to function, these blockchains need validators who earn rewards in return for staking.
If you're using a non-custodial wallet to stake, for example, Yoroi or Daedalus to stake ADA, you'll need to pay income tax on your staking rewards, based on the fair market value of the tokens in AUD on the day you received them.
DeFi staking
Meanwhile, there's also what's known as DeFi staking. This is where you stake crypto assets with a given protocol in order to earn rewards. Like with most DeFi taxation, the tax you'll pay depends on the specific DeFi protocol you're using. SushiSwap is one of the best examples of this, as you could potentially pay either type of tax depending on which protocol you're using on the platform.
For example, if you have SLP or KMP tokens you want to stake, you can do so and earn SUSHI tokens as a reward. As you're earning new tokens, you'll need to pay income tax based on the fair market value of your SUSHI tokens (in AUD) on the day you received them.
Now you want to stake your SUSHI tokens in the Sushi Bar to compound those rewards. But when you use the Sushi Bar protocol, you'll receive XSUSHI tokens in return. You don't earn new XSUSHI tokens when you stake SUSHI; instead, XSUSHI tokens accrue value. You'll only realise a gain when you unstake your SUSHI by trading your XSUSHI tokens back. This transaction would be viewed as two disposals (one when you stake and one when you unstake), and you'll pay CGT on any profits as a result.
Play to earn income
If you’re seen to be earning new tokens — for example, earning SLP or AXS tokens through playing Axie Infinity — this is likely to be seen as income and subject to Income Tax.
Meanwhile, if you’re selling or trading tokens or NFTs — like selling or trading voxel NFTs on Sandbox — this is more likely to be seen as a disposal of a capital asset and subject to Capital Gains Tax.
Token rebases
The ATO hasn't issued specific guidance on token rebases.
However, where the token rebase protocol is designed to rebalance a price, we can liken it to a stock split. A stock split happens when a company splits existing shares into further shares, increasing liquidity. Most tax offices do not view this as a taxable event. Though the investor may have more shares, the shares have the same market value as the shares prior to the stock split. With this in mind, it would be reasonable to assume token rebases could be tax-free, provided you realise no gain or loss as a result.
However, where token rebase protocols are designed to pay out a reward, this would likely be seen as additional income and subject to tax.
What's the best Australia DeFi tax calculator?
Koinly is a crypto tax tool that calculates your crypto taxes for you, meaning you don’t have to go through the hassle of doing it yourself, including for more complicated portfolios that include DeFi transactions like liquidity provision, yield farming, NFTs, staking, lending, and more.
Once your transactions are imported, Koinly calculates your crypto taxes for you. All you need to do is head over to the tax reports page, where you’ll see a simple summary of your crypto taxes. Below this, you’ll find a variety of tax reports you can download and submit to the ATO, including the myTax report.
