Crypto Corner: How the ATO taxes meme coins, DeFi, and staking

Welcome to Crypto Corner, presented by BTC Markets, where each episode we explore the latest in crypto market trends. In this edition, Patrick McGimpsey, Product Manager at Crypto Tax Calculator, joins Charlie Sherry, Head of Finance at BTC Markets, to share timely advice on navigating one of the most complex aspects of crypto participation: tax.

In Australia, crypto is treated as a CGT (Capital Gains Tax) asset, much like shares or property. But because crypto activity often involves frequent trades, token swaps, staking rewards, and smart contract interactions, it is easy to trigger unintended tax events. According to Patrick, being across the difference between capital gains and income tax is essential.

“Selling crypto, swapping tokens, or even depositing into certain DeFi contracts can trigger capital gains events. But things like staking rewards, airdrops, and farming rewards are usually treated as income, and that can be tricky if the asset drops in value after you receive it.”

DeFi activity is a particularly grey area. Under Australian Taxation Office (ATO) guidance, some actions, like providing liquidity or interacting with a smart contract, can be considered disposals, even if you still technically hold exposure to the same assets. If you can’t trace which tokens are yours, the ATO may treat the transaction as a taxable event.

Another area investors often overlook is the tax implication of meme coin trading. While the transactions might seem small or speculative, each trade is a potential CGT event. Patrick points out that it is easy to make a gain on one coin, roll it into another, and then end up with a loss, without realising you still owe tax on the original gain.

“If you’ve made a gain, you’ll owe tax on that even if you lose money later. That’s why it’s so important to keep track of where you stand before June 30.”

The episode also touches on tax-loss harvesting and the ATO’s stance on wash sales, where investors sell a coin at a loss before year-end and buy it back shortly after. The ATO considers this tax avoidance and may deny the deduction.

For those who have experienced scams, lost access to wallets, or fallen victim to rug pulls, Patrick clarifies that it is possible to claim a capital loss, but only with sufficient documentation and proof.

“If you’re going to claim lost or stolen crypto, you need the proper records, like a police report or transaction logs, to show the ATO that it really happened.”

It is one of many insights in this episode that shed light on how investors can better prepare for tax time and stay on the right side of the ATO.

Watch the full episode on Ticker News.

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