You need to work out your cryptoasset income and expenses before you can work out your net income (or loss) for your income tax return.
There are further rules you need to be aware of if your cryptoasset activity is a business and your cryptoassets are trading stock.
Cryptoasset income
Your cryptoasset income might include income from:
- mining cryptoassets (such as block rewards and transaction fees, including income from a mining pool)
- staking cryptoassets or using a staking-as-a-service provider
- lending cryptoassets to another person (including crypto 'interest')
- selling or exchanging cryptoassets (including mining rewards)
- getting paid in cryptoassets for goods or services you provide.
Usually these amounts are income in the income year they are received.
If you hold cryptoassets as trading stock, your income also includes the closing cost of your cryptoassets. This is the cost of the cryptoassets you hold as trading stock at the end of the income year.
Acquiring cryptoassets to sell or exchange
Cryptoasset expenses
The type of expenses you can claim will depend on whether you are in business or not. However, you can generally deduct the following expenses from your cryptoasset income.
- The cost of your cryptoassets. This is the amount you paid for your cryptoassets including any transaction fees.
- Depreciation of capital assets such as computer hardware or software.
- Interest charged on money you’ve borrowed to buy your cryptoassets (only if any profit from their sale is taxable).
- Other expenses in relation to your cryptoasset activity. For example, if you're a miner this could include electricity or rental costs.
If you hold cryptoassets as trading stock, your expenses also include the opening cost of your trading stock. This is generally the same as the closing cost of your trading stock at the end of the previous year. If it’s your first year in business you may not have opening stock.
You can usually claim a deduction in the income year you incur the expense. Generally this is when you make a payment. If you do not hold cryptoassets as trading stock, the deduction for the cost of cryptoassets is only available when you sell or exchange them.