Crypto Staking Tax in Australia: Income or Capital Gain?
ATO rules on crypto staking tax in Australia explained clearly, income at receipt, CGT on disposal, plus airdrops, with worked examples.
By Timothy Hirou GaschereauPublished 9 min read
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This article is general information only and does not constitute tax advice. This is part of a wider guide to crypto and alternative income on Snowball Invest. New to crypto tax generally? Our full crypto tax guide covers the fundamentals before you dive into staking specifics.
Quick answer
Staking rewards are taxed twice. The ATO treats them as ordinary income the moment you receive them, you declare the AUD market value at that point as "other income". Then, when you sell or swap those tokens later, a separate CGT event kicks in. You're not choosing between income tax and CGT, you get both.
In this guide
- →The double tax event, how staking rewards are actually taxed
- →Who this treatment applies to, beyond simple proof-of-stake
- →Three worked examples, including a loss and a 12-month hold
- →Why airdrops aren't always taxed the same way
- →What records the ATO expects you to keep
🔁 The double tax event
Every staking reward creates two separate tax moments. Receipt: the AUD market value of the reward tokens on the day you receive them is assessable income, declared as "other income", and that same value becomes the cost base of those tokens. Disposal: when you later sell, swap or spend those tokens, a CGT event occurs, your capital gain or loss is the sale proceeds minus the cost base set at receipt. Held 12+ months, the 50% CGT discount may apply to that second step.
🎯 The essential: The CGT discount doesn't apply to the income tax step at receipt. It only potentially applies to the capital gain made at disposal.
Day 0: you receive it
100 tokens worth $2,000. Income tax on the full $2,000, and $2,000 becomes your cost base.
Later: you sell it
Sell for $3,500. A separate CGT event on the $1,500 gain above that cost base.
Two tax moments, two different amounts. You get both, not one or the other.
👥 Who this applies to
The ATO applies this treatment broadly, covering rewards from proof of stake staking (direct and pool-based), proxy staking and voting tokens, proof of authority and proof of credit validators, and agent, guardian or premium staker roles. If you're earning rewards for participating in network consensus in any of these ways, the same rules apply.
🧮 Worked examples
Profit: receive 100 tokens worth $2,000, declare $2,000 as income. Sell for $3,500 less than 12 months later, capital gain of $1,500, no discount. Total: income tax on $2,000, CGT on $1,500.
Loss: receive 200 tokens worth $1,000, declare $1,000 as income (unavoidable). Sell for $300 after the price drops, a $700 capital loss, which can offset other capital gains but not the income already declared.
Held 12+ months: receive 500 tokens worth $2,000 (income declared). Sell over a year later for $4,000, capital gain of $2,000, halved by the 50% discount to a taxable gain of $1,000. Holding for 12+ months halved the CGT bill on the disposal gain, the income tax on receipt is unaffected either way.
🪂 Airdrops: a different story
| Airdrop type | Income at receipt? | Cost base |
|---|---|---|
| Established token airdrop | Yes, ordinary income | Market value at receipt |
| Initial allocation airdrop (new token, no prior trading) | No | $0 if free, or amount paid |
If you receive tokens already trading, that's ordinary income at receipt, same as staking. But if a brand-new token is distributed for the very first time, no prior trading, no established market price, the ATO's own guidance says you don't derive income or make a capital gain at receipt. CGT only applies when you dispose of the tokens, and the 50% discount may apply if you've held them 12+ months.
In one of the ATO's own published examples, a taxpayer received 800 tokens through an initial allocation airdrop with a $0 cost base, then sold them over a year later for $4,000. Because the tokens were held more than 12 months, the 50% discount brought the taxable gain down to $2,000.
🗂️ Record-keeping
Keep records for at least 5 years: the date and AUD value of every reward at receipt, the cost base for each parcel, and the date and proceeds of any disposal. The ATO's data matching program receives transaction data directly from Australian exchanges, if your declared income doesn't match, expect a follow-up. Export your transaction history from every exchange regularly, and before closing any account, download the full history first.
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❓ Frequently asked questions
Is crypto staking taxed in Australia?
+
Yes. The ATO treats staking rewards as ordinary income at the time you receive them, declared as "other income". When you later sell those tokens, a separate CGT event applies.
Do I pay income tax AND capital gains tax on staking rewards?
+
Potentially both, but on different amounts. Income tax applies to the AUD value at receipt. CGT applies to any gain or loss between that receipt value and the eventual sale price.
What is the cost base of staking rewards?
+
The AUD market value of the tokens on the day you received them, the same figure you declared as income. It's not zero, that's a common mistake.
Can I get the 50% CGT discount on staking rewards?
+
Not on the income at receipt. It can apply to the capital gain made at disposal, if you held the reward tokens for at least 12 months before selling.
How are airdrops taxed differently from staking rewards?
+
An established token airdrop is taxed the same as staking, ordinary income at receipt. An initial allocation airdrop, the first-ever distribution of a brand-new token, isn't income at receipt, it only triggers CGT when you sell, with a cost base of $0 if received for free.
Do I need to declare staking rewards if I haven't sold them?
+
Yes. The income tax obligation arises at receipt, not at sale. Even if you're still holding the tokens, declare the AUD value as income in the financial year you received them.
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Try the Capital Gains Tax calculator →General information only. This article is educational and does not constitute personal financial advice. It does not account for your circumstances. Consider your own situation and seek advice from a licensed adviser before acting. Read our full disclaimer.
Timothy Hirou Gaschereau
Founder of Snowball Invest, not a financial adviser.
I write about what I'm learning myself, because nobody ever taught us how to take control of our own money. It's a skill, not a mystery, and it's never too late to learn it. The best day to start was yesterday, the second best is today.
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