How to Qualify for the Personal Use Asset Exemption

  • 18 Aug 2025
  • 4 min read
crypto tax article graphic

Cryptocurrency has become increasingly mainstream in Australia, but when it comes to tax, many consumers remain unsure about when their crypto use is exempt from capital gains tax (CGT). The Australian Taxation Office (ATO) provides a personal use asset exemption for certain crypto transactions—here’s what you need to know to stay compliant.

What Is the Personal Use Asset Exemption?

If your crypto asset is classified as a personal use asset, capital gains tax may not apply when you dispose of it. A personal use asset is an asset acquired mainly to buy items for your personal use or consumption—for example, paying for event tickets, purchasing goods, or buying online subscriptions for yourself.

Core Criteria to Qualify

To qualify for the CGT exemption as a personal use asset, your crypto must meet all these requirements:

  • Purpose of Acquisition: The crypto must be acquired with the intention of using it to purchase an item or service for personal use; not as an investment or with an expectation of profit.

  • Short Holding Period: The crypto should be held for a short period—the shorter, the better. Although the ATO does not specify an exact timeframe, guidance suggests that immediate use (such as same-day) or within a fortnight may be acceptable, while holding for several months is likely not.

  • Direct Purchase: You must use the crypto directly to pay for the personal item or service. If you convert crypto to Australian dollars (or another crypto) before the purchase, it’s less likely to qualify.

  • Acquisition Cost: The value of the crypto used must be less than $10,000 at the time of acquisition. This threshold is important—if you spend more than this, the exemption does not apply.

  • Personal Use Only: If you use a payment gateway or intermediary, or the transaction is linked to business or investment use, it will disqualify the exemption.

Examples That Qualify

  • Buying $270 worth of Bitcoin in the morning to purchase concert tickets later that same day.

  • Regularly buying a small amount of crypto specifically to pay recurring personal subscriptions and spending it within a short time frame.

When Crypto Will NOT Be a Personal Use Asset

Most crypto transactions do not qualify for the exemption. The following will generally NOT be considered personal use:

  • Holding crypto as an investment or for profit.

  • Holding crypto for more than a brief period (e.g., several months).

  • Using crypto in business activities or for trading.

  • Converting crypto into Australian dollars (or another crypto) before purchasing goods or services.

  • Acquiring crypto for more than $10,000 in value.

Capital Losses: Important Note

If you dispose of crypto classified as a personal asset and make a capital loss, you cannot offset this loss against other capital gains or carry it forward to future years. 

Record-Keeping and ATO Evidence

  • Keep detailed records: Document dates, amounts, and the nature of each transaction.

  • Burden of Proof: If the ATO reviews your return, you must clearly show that the crypto was acquired and disposed of as a personal use asset.

How to Claim the Exemption

  • If your crypto qualifies, do not report the capital gain in your tax return. The exemption applies automatically, provided the criteria are met.

  • You must, however, be prepared to justify your claim if asked by the ATO.

Final Thoughts

The personal use asset exemption for crypto is narrow and rarely applies to typical crypto investors. Most Australians will not qualify, as most crypto is held for investment. Always consult with a qualified tax professional if unsure, and ensure you are thorough with your records to substantiate any exemption claim with the ATO.

By following these rules, you can safely take advantage of the ATO’s CGT exemption for genuine personal use of crypto, without falling foul of Australian tax law.