Hold 12 months or trade often?
The 50% CGT discount is one of the biggest tax advantages for crypto investors in Australia. But is holding always better than trading? Here's how to decide.
| Hold 12+ months | Trade frequently | |
|---|---|---|
| CGT discount | 50% discount | No discount |
| Effective tax rate | ~18.5% (at 37% marginal) | ~37% (at 37% marginal) |
| Record keeping | Simple (fewer transactions) | Complex (every trade) |
| Strategy | Long-term investing | Active trading/speculation |
| Risk profile | Ride out volatility | Capture short-term moves |
When you hold a CGT asset (including cryptocurrency) for at least 12 months, you're eligible for the 50% CGT discount. This means only half of your capital gain is added to your taxable income.
Sold before 12 months
$10,000 gain at 37% rate:
Sold after 12 months
$10,000 gain at 37% rate:
Every crypto-to-crypto trade is a taxable event. If you make 100 trades a year, you need to calculate the cost base and capital gain/loss for each one. This includes:
The ATO has data-matching programs with crypto exchanges. They know about your trades, so accurate records are essential.
Capital losses can offset capital gains. If you've made losses on some crypto trades, you can use them to reduce gains on others. Key points:
How does the 12-month CGT discount work for crypto?
If you hold cryptocurrency for at least 12 months before selling, you receive a 50% CGT discount. This means only half of your capital gain is added to your taxable income. For example, a $10,000 gain becomes $5,000 for tax purposes.
What if I trade between different cryptocurrencies?
Trading one crypto for another (e.g., Bitcoin to Ethereum) is a taxable event. You're treated as having sold the first crypto at market value, potentially triggering a capital gain or loss. The 12-month clock resets for the new crypto you acquire.
Are NFTs taxed the same way as cryptocurrency?
Yes, NFTs are treated as CGT assets by the ATO. The same rules apply: selling for a profit triggers capital gains tax, and the 50% discount is available if you hold for 12+ months. Creating and selling NFTs may be treated as business income instead.
How do I track cost base for cryptocurrency?
You need to record the date acquired, purchase price in AUD, transaction fees, and date sold. Many people use crypto tax software that syncs with exchanges. Without records, the ATO may assume zero cost base, meaning your entire sale is taxable.
Tax Accuracy & Sources
Compares Australian CGT treatment of long-term crypto holding (12+ months, eligible for 50% discount) versus frequent trading. Examples use a 37% marginal rate; your actual saving depends on your income, losses, and disposal sequence.