If there is a CGT event, you may make either a capital gain or capital loss on the disposal of the crypto asset. If you make a capital gain, you may pay tax on it.
A transaction involving a disposal takes place when you sell a crypto asset, gift a crypto asset, trade or exchange a crypto asset for another crypto asset, convert a crypto asset to Australian or foreign currency (otherwise known as ‘fiat currency’) or buy goods or services with a crypto asset.
Like shares, the value of your crypto asset helps determine if a CGT event took place.To work out the value of your crypto assets when you acquire or dispose of them you will need to convert their value to Australian dollars. Use the exchange rates on a reputable digital currency exchange at the time of the transaction to work out the value of your crypto assets.
When you exchange one crypto asset for another crypto asset, you dispose of one CGT asset and acquire another. Therefore, a CGT event happens to your original crypto asset. Because you receive property instead of money, you need to work out the market value of the crypto asset in Australian dollars. See below an example.
Example: market value of new asset determines old asset’s disposal proceeds
Katrina acquires 100 Coin A for $15,000 on 5 July 2021. Katrina decides to exchange 20 Coin A for 100 Coin B through a reputable digital asset exchange on 15 November 2021. Using the exchange rates shown on the digital asset exchange at the time of the transaction, the market value of 100 Coin B was $6,000. Therefore, Katrina’s capital proceeds are $6,000 for the disposal of 20 Coin A. Katrina uses this amount to work out her capital gain for the CGT event.