Understanding Crypto-to-Crypto Trading Taxation

  • 10 June 2025
  • 4 min read
crypto tax article graphic

Cryptocurrency trading has surged in popularity across Australia, but with this growth comes the need for clear tax compliance. Many Australian investors and traders are suprised to learn that swapping one crypotcurrency for another—known as crypto-to-crypto trading—is a taxable event. This article provides a comprehensive overview of how crypto-to-crypto trades are taxed, the rules set by the Australin Tax Office (ATO), and practical guidance for meeting your obligations. 

How Does the ATO Classify Cryptocurrency?

The ATO does not consider cryptocurrency as money or a foreign currency. Instead, all cryptocurrencies, including coins, tokens, stablecoins, and NFTs—are classified as property and treated as assets for Capital Gains Tax (CGT) purposes. This means that any disposal of cryptocurrency, including exchanging one crypto for another, triggers a potential tax obligation.

What Is Crypto-to-Crypto Trading

Crypto-to-crypto trading refers to the act of exchanging one cryptocurrency for another without converting to Australian dollars (AUD) or any fiat currency. For example, swapping Bitcoin (BTC) for Ethereum (ETH) is a crypto-to-crypto trade. 

Is Crypto-to-Crypto Trading Taxable?

Yes, any swap or exchange of cryptocurrencies is considered a taxable event. Even if you do not receive any AUD in the trasaction, you must still calculate and report any capital gain or loss at the time of the trade. 

How Is the Capital Gain or Loss Calculated?

When you trade one crypto for another, you are disposing of one asset and acquiring another. The capital or loss is calculated as follows:

  • Cost Base: The original value (in AUD) you paid for the cryptocurrency you are disposing of. 
  • Proceeds: The market value (in AUD) of the cryptocurrey you receive at the time of the trade. 

Capital Gain/Loss Formula:

Capital Gain/Loss = Market Value Of Crypto Received — Cost Base of Crypto Disposed

Example:

Supposed you bought 1 BTC for $10, 000. You later trade it for 3 ETH when each ETH is worth $5,000, totalling $15,000.

Your capital gain is $15,000 (market value of ETH received) minus $10,000 (cost base of BTC), resulting in a $5,000 capital gain.

If you incur loss (i.e., the value of the crypto received is less than your original cost base), you can use that capital loss to offset other capital gains. 

Stablecoins and Crypto-to-Crypto Taxation

Stablecoins, cryptocurrencies pegged to fiat currencies like AUD, are treated the same as any other crypto asset. Swapping Bitcoin for a stablecoin, for example, is taxed in the same way as any other crypto-to-crypto trade.

Investor vs. Trader: Why It Matters

The ATO distinguishes between two types of crypto participants:

  • Investors: Individulas who buy and sell crypto as personal investment to build walth over time. Investors are generally subject to CGT rules and can access the 50% CGT discount if they hold the asset for more than 12 months. 
  • Traders: Individuals or businesses engaging in crypto trading as a business activity. Traders are taxed on profits as ordinary income and do not receive the CGT discount. 

Most Australians fall under the investor category, but if you are trading frequently or operating as a business your tax treatment may differ. 

CGT Discount for Long-Term Investors

If you hold a cryptocurrency asset for more than 12 months before disposing of it (including via a crypto-to-crypto trade), you may be eligible for a 50% discount on the capital gain. This means only half is added to your taxable income for that financial year. 

Reporting Crypto-to-Crypto Trades on Your Tax Return

All capital gains or losses from crypto-to-crypto trades must be reported in your annual tax return. The ATO requires you to keep detailed records of all your transactions, including;

  • Date of each transactions
  • Type of cryptocurrency and quantity
  • AUD value at the time of the trade
  • Purpose of the transaction
  • Details of the other party (if you know)

The financial year runs from 1 July to 30 June, and the tax reporting deadline is 31 October.