Australia: crypto CGT events, personal use limits, wrapping and DeFi

The ATO treats most crypto activity as a CGT event, including wrapping and many DeFi deposits. A 2027 reform changes how gains are measured.

2026-10-17 · 6 min read

If your business, fund or its people hold crypto with an Australian tax footprint, assume almost every movement out of a wallet you control is a CGT event that needs an Australian dollar value on the day. The ATO's published views on wrapping and DeFi are strict, and a capital gains reform starting 1 July 2027 adds a new valuation date to plan for now.

What counts as a CGT event

The ATO says a CGT event happens when you dispose of a crypto asset, and lists the common disposals: selling it, gifting it, swapping it for another crypto asset, converting it to Australian or foreign currency, and paying for goods or services with it [1]. Each crypto asset is a separate CGT asset, so you need details for each one [3].

Values must be in Australian dollars at the time of each acquisition and disposal. The ATO notes it has used Reserve Bank of Australia exchange rates since 1 January 2020 and accepts any reasonable external rate for currencies the RBA does not list [1]. The ATO also runs a crypto data-matching program that compares tax returns with transaction and account data from designated service providers [1], so gaps between your records and exchange records are likely to be noticed.

If the asset is held as an investment, a capital loss can reduce capital gains but cannot be deducted against other income [3]. Under the current rules, individuals may be able to use the CGT discount where the asset was held for at least 12 months [3]. Whether your entity type gets the discount at all is a separate question to confirm with your adviser.

The personal use asset exemption is narrow

A capital gain on crypto is exempt if the asset is a personal use asset and it cost less than $10,000 [2]. The test is main use, judged at the time of disposal, not the intention when you bought it [2]. The ATO's own example is buying crypto and spending it on concert tickets the same day [2].

The ATO says crypto held as an investment, in a profit-making scheme or in a business is not a personal use asset [2]. Except in rare cases, it also says the exemption is not available where you convert to dollars first, spend through a gift card or top up a prepaid card, or pay through a payment gateway rather than paying the merchant directly [2]. Losses on personal use assets are disregarded entirely [2]. For a company treasury, this exemption is unlikely to be relevant.

Wrapping is a CGT event in the ATO's view

The ATO's DeFi page says that when you send ETH to a smart contract to receive WETH, CGT event C2 happens because you no longer control the original asset through your private key [4]. Proceeds are the market value of the wrapped token received, and that value becomes the wrapped token's cost base [4]. Unwrapping is a second C2 event when the wrapped token is burnt [4].

This view is set out in Draft Taxation Determination TD 2026/D2, released on 19 August 2026 alongside a draft ruling on airdrops, TR 2026/D1 [4][7]. As of October 2026 both are drafts, so the final position could change. Note the draft applies only to the specific smart-contract wrapping arrangement it describes [4].

Lending, borrowing and liquidity pools

The ATO cautions that DeFi words like lending and interest do not always mean what they mean for tax [4]. Its general position is that a CGT event happens if you transfer a fungible token to an address you do not control that already holds a balance of the same token [4]. Proceeds equal the market value of whatever you receive in return, which may be another token or a right to get tokens back later [4]. The securities lending rules for shares do not apply to crypto lending [4].

For liquidity pools, the ATO says depositing is a CGT event, with proceeds equal to the market value of the LP tokens or rights received, and withdrawing is another CGT event on those tokens or rights [4]. Periodic DeFi rewards are assessable income at market value when received, taxed similarly to interest, and that value becomes their cost base [4].

The July 2027 CGT reform

The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received assent on 26 June 2026 [6]. According to the ATO, from 1 July 2027 it replaces the 50% discount for resident individuals, trusts and partnerships with cost base indexation for gains accruing from that date, introduces a minimum 30% tax for individuals on certain net capital gains, and brings pre-CGT assets into the regime for future gains [5]. The ATO describes this as the first stage, with more legislation to come [5].

For assets held across 1 July 2027, the law treats them as disposed of immediately before that date and reacquired on it, with the gain deferred until a later CGT event [5]. You may need the market value immediately before 1 July 2027, or an alternative apportionment method that the government is still developing [5]. For crypto, that means a price snapshot per asset per wallet at that moment. Because wrapping and DeFi moves create many separate CGT events, KPMG notes the new loss ordering and minimum tax rules will interact with them [7].

Records the ATO expects

The ATO lists receipts for each buy, transfer and disposal, transaction dates, the purpose and counterparty (an address is enough), exchange records, the Australian dollar value at each transaction, adviser and software costs, and wallet records [3][8]. Keep them for five years from the later of when they were made, when the transaction completed, or the year of the CGT event [8]. The ATO suggests exporting exchange histories at least every three months and before closing any account [8].

What to do

• Tag every wrap, unwrap, LP and lending movement as a potential CGT event, not an internal transfer.
• Store the AUD value and the rate source with each event.
• Plan a 30 June 2027 snapshot of market value for every crypto asset held, by entity and wallet.
• Track TD 2026/D2 and TR 2026/D1 until they are finalised.
• Export exchange histories quarterly and before closing accounts.
• Confirm with an Australian tax adviser how the rules apply to your entity type and facts.

This is general information, not tax advice.

Sources

1. Crypto asset transactions (Australian Taxation Office)
2. Crypto asset as a personal use asset (Australian Taxation Office)
3. How to work out and report CGT on crypto (Australian Taxation Office)
4. Decentralised finance and wrapping crypto (Australian Taxation Office)
5. Capital gains tax reform (Australian Taxation Office)
6. Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Federal Register of Legislation)
7. Australia: Draft guidance on cryptoassets (KPMG)
8. Keeping crypto records (Australian Taxation Office)

General information for finance teams, current as of publication. Not legal, tax or accounting advice.

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