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5 Crypto Tax Mistakes Aussies Keep Making - and How to Avoid Them

5 Crypto Tax Mistakes Aussies Keep Making - and How to Avoid Them

Think the ATO Isn’t Watching? Think Again

Crypto has been called a digital gold rush. And like any gold rush, fortunes are made – but just as quickly lost if you don’t keep the taxman happy. The Australian Taxation Office (ATO) is far more crypto-aware than many realise. They’ve built the systems, forged the exchange relationships, and are now actively sending letters to investors they suspect are under-reporting.

Below, we’ll walk through the five most common mistakes Aussie investors make with crypto tax – plus some quick fixes you can apply before tax time.


Mistake 1: Pretending the ATO Can’t See You

Once upon a time, some investors thought they could quietly buy a bit of Bitcoin and slip under the radar. Those days are gone.

  • Every Australian exchange requires KYC (Know Your Customer) checks. That means your ID is linked to your account and wallet addresses.
  • The ATO uses data-matching and blockchain analytics to follow the trail. Even peer-to-peer transactions are increasingly visible.
  • The ATO treats crypto just like property: selling, swapping, and even paying network fees can be a capital gains tax (CGT) event.

Example:

  • You buy 1 ETH at $3,000.
  • Later, you swap it for a different coin when ETH is worth $3,600.
  • That $600 difference is a taxable gain – even though no cash hit your bank account.


Mistake 2: Misunderstanding Staking Rewards

Staking can feel like “free money.” Unfortunately, the ATO disagrees.

  • Staking rewards are ordinary income on the day you receive them.
  • Later, when you sell, they also trigger CGT. Yes, that means two tax events.

Example:

  • You receive 0.1 ETH as a staking reward when ETH = $4,000. That’s $400 of income.
  • A year later, you sell it for $5,000. That $1,000 gain is a separate CGT event.

Quick Steps:

  1. Log each staking reward with the date and AUD value.
  2. Track the cost base for later CGT reporting.
  3. Automate it with tax software – unless you like spreadsheets with 1,000+ rows.


Mistake 3: Treating Airdrops Like Freebies

Airdrops feel like a gift from the crypto gods. Tax-wise, they’re anything but simple.

  • The value on the day you receive the airdrop is income.
  • That same value also becomes your cost base for future CGT.

Many investors forget to record the spot price at the time of receipt. Months later, when they sell, they have no record – and the ATO isn’t fond of “guesstimates.”


Mistake 4: Forgetting to Use Losses

Not all losses are bad – especially at tax time.

  • Capital losses can offset capital gains, across both crypto and shares.
  • This is called tax-loss harvesting, and it can save thousands.

Example:

You sell BTC with a $10,000 gain.

You also sell a dud altcoin with a $4,000 loss.

Instead of paying tax on $10,000, you only pay on $6,000.

Loss harvesting only works if you actually sell the asset. Simply holding a loser doesn’t count.


Mistake 5: Mixing Personal and Business Wallets

This one causes real headaches. The ATO treats personal and business crypto as separate entities.

  • Transferring from a personal wallet to a business wallet can trigger a CGT event.
  • If you blur the lines, you risk audits in both entities.

Example:

  • You buy Bitcoin personally, then move it into your company wallet.
  • From the ATO’s perspective, you just sold your personal BTC and your business bought it.


The Final Buzz: Records Are Everything

Whether it’s staking, airdrops, swaps, or losses – the real risk isn’t the tax bill, it’s the missing records. If you can’t show the ATO how you calculated your income and gains, you’re in trouble.

Most investors find it impossible to do this manually once they’ve hit more than a few hundred transactions. That’s why portfolio tracking and tax software is becoming essential.

Note: This article is for education, not advice. For personal tax matters, speak with a qualified accountant.

 

Keep building your crypto knowledge. Up next: Crypto and the ATO: What Every Investor Needs to Know →

 

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