What Is The Tax-Free Threshold For Cryptocurrency In Australia?
- 5 May 2025
- 6 min read
Understanding the Tax-Free Threshold for Cryptocurrency in Australia
As cryptocurrency continues to gain traction, more individuals are engaging in buying, selling, and trading digital assets. With this surge in activity, questions about taxation-particularly the tax-free threshold for cryptocurrency-have become increasingly relevant. This comprehensive guide explains how the tax-free threshold works for crypto in Australia, who it applies to, and what exemptions and concessions are available for consumers.
What Is the Tax-Free Threshold for Cryptocurrency?
The Australian Taxation Office (ATO) treats cryptocurrency as property, not currency. This means that any profits made from selling, trading, or otherwise disposing of cryptocurrencies are generally subject to Capital Gains Tax (CGT). However, there are important thresholds and exemptions that can reduce or eliminate your tax liability, depending on your circumstances.
General Tax-Free Threshold: $18,200
Australia has a general tax-free threshold for individual income. For the 2023–2024 financial year, the first $18,200 of your total taxable income-including income from cryptocurrency, is tax-free. If your total income (from all sources, including crypto gains, salary, and other investments) is below this threshold, you will not pay any income tax.
- Example: If your only income for the year is $15,000 in capital gains from selling cryptocurrency, you will not owe any income tax, as this amount is under the $18,200 threshold.
This threshold is particularly beneficial for those who earn small amounts from cryptocurrency activities, such as occasional trading, hobby mining, or staking rewards.
Capital Gains Tax (CGT) and Cryptocurrency
When you dispose of cryptocurrency-by selling, swapping, or using it to purchase goods or services-you may trigger a CGT event. The gain or loss is calculated as the difference between the cost base (what you paid for the crypto) and the proceeds (what you received when you disposed of it).
CGT Discount for Long-Term Holders
If you hold your cryptocurrency for more than 12 months before disposing of it, you may be eligible for a 50% CGT discount. This means that only half of your capital gain is added to your taxable income, effectively reducing your tax liability.
- Example: You buy Ethereum for $4,000 and sell it after 13 months for $10,000, making a $6,000 capital gain. With the 50% CGT discount, only $3,000 is added to your assessable income.
Personal Use Asset Exemption
Not all cryptocurrency transactions are subject to CGT. The ATO provides a specific exemption for personal use assets.
What Is a Personal Use Asset?
A cryptocurrency is considered a personal use asset if you acquire and use it to purchase goods or services for personal consumption, rather than as an investment. If the cost of the cryptocurrency is $10,000 or less, any capital gain from its disposal may be disregarded for tax purposes.
Key Points:
The $10,000 threshold applies to the original purchase price, not the value at disposal.
The intention at the time of acquisition is crucial. If you bought crypto as an investment, it likely does not qualify for this exemption.
The longer you hold the crypto, the less likely it is to be considered a personal use asset.
Example:
You buy $500 worth of Bitcoin specifically to pay for a holiday and use it within a week. This transaction may qualify for the personal use asset exemption, and any gain is not subject to CGT.
Other Tax-Free Crypto Scenarios
While most crypto transactions are taxable, certain activities are not subject to tax in Australia:
Buying crypto with AUD: No tax is payable when you purchase cryptocurrency with Australian dollars.
Holding crypto: Merely holding cryptocurrency does not trigger any tax event.
Receiving crypto as a gift: Gifts of cryptocurrency are not taxable upon receipt.
Transferring crypto between your own wallets: No tax applies, provided you do not dispose of the asset or realise a gain.
When Is Crypto Tax-Free?
To summarise, here are the main situations where cryptocurrency transactions are tax-free for consumers:
Your total taxable income (including crypto gains) is below $18,200.
You dispose of cryptocurrency that is a personal use asset and the cost is $10,000 or less.
You are simply buying, holding, or transferring cryptocurrency between your own wallets.
You receive cryptocurrency as a genuine gift.
Common Taxable Crypto Events
It’s important to remember that most other crypto activities are taxable, including:
Selling or swapping cryptocurrency for another cryptocurrency or for fiat currency.
Using cryptocurrency to purchase goods or services (unless it qualifies as a personal use asset).
Earning income from staking, mining, airdrops, or DeFi rewards (these are usually treated as ordinary income, not capital gains).
Trading as a business, rather than as an individual investor, where your profits are taxed as business income.
Record-Keeping and Reporting
The ATO requires you to keep detailed records of all cryptocurrency transactions for five years. This includes:
Dates of acquisition and disposal
Value in AUD at the time of each transaction
The purpose of the transaction
Details of the other party (even if it’s just their wallet address)
You must report your crypto gains and income in your annual tax return, using the same process as for other investments.
Conclusion
For most Australians, the tax-free threshold for cryptocurrency is the same as the general income tax-free threshold: $18,200 per year. If your total taxable income, including any crypto gains, is below this amount, you will not pay any tax. Additional exemptions exist for personal use assets (up to $10,000) and for small business operators through specific CGT concessions.
Understanding these rules is essential for effective tax planning and compliance. If you are unsure about your specific situation, consult a qualified tax professional or the ATO’s latest guidance to ensure you meet your obligations and make the most of available exemptions.