Tax basics (general information only)

A plain-English overview of how Australian tax can apply to share and crypto trading. Not tax advice. · about 5 min

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General education only. Not financial, tax or legal advice.

General information only. This is not tax, legal or financial advice. Tax rules change and depend on your situation. Check the Australian Taxation Office or ask a registered tax agent.

Paper trades

Virtual trades have no tax consequences. Nothing here is a real gain or loss.

Real trades: the general picture

• Capital gains tax (CGT). For many Australian residents who invest, profit from selling shares, ETFs or crypto is a capital gain. Net gains are added to your assessable income and taxed at your marginal rate for the year.
• The 12-month discount. Individuals who hold an asset for at least 12 months before selling may generally be able to reduce the gain by 50%.
• Losses. Capital losses can generally offset capital gains (not your salary) and can usually be carried forward.
• Trading as a business. If your activity looks like a business of trading, the profits may be treated as ordinary income instead. The ATO considers factors such as frequency, scale and intent.
• Records. Keep dates, prices and brokerage for every trade. Brokerage is generally part of your cost base. Your journal export can help but isn’t a tax record.
• Overseas shares and crypto have extra rules (currency conversion, reporting).

Short-term, frequent trading gets no 12-month discount, so tax can take a bigger bite of gains than many beginners expect.

Key points

• Paper trades have no tax effect.
• Real gains are generally taxed at your marginal rate; a 50% discount may apply after 12 months for individuals.
• Get advice from the ATO or a registered tax agent.

Checklist

Tick these off as you practise (saved in this browser).

• I know paper trades don’t create tax
• I know where to check rules (ato.gov.au or a tax agent)
• I plan to keep records of any real trades

Quick quiz

Pass mark: 2 out of 3. You can retry as often as you like.

1. Do paper (virtual) trades create a tax liability?

Yes, always No, there is no real gain or loss Only above $1,000

2. Generally, an individual selling an asset held at least 12 months may be eligible for:

A 50% reduction of the capital gain No tax at all A rebate of brokerage

3. Where should you get advice about your own tax position?

A forum post The ATO or a registered tax agent This website

Check answers