Cryptocurrency in Business

At the time of writing, one Bitcoin is valued at approximately AUD $174,000. The rapid adoption of cryptocurrency (crypto) in Australia—spurred by major payment networks like Mastercard launching crypto-enabled cards and SWIFT piloting digital asset integration—means that tax agents can no longer afford to treat crypto as a fringe issue. The business landscape is evolving, and so to must our understanding of the related tax implications.

Classifying crypto

The ATO does not regard cryptocurrency as “money” or “foreign currency” for taxation purposes. Instead, it is generally treated as a form of property — a digital asset. This distinction is crucial: unlike traditional currency, crypto assets may attract capital gains tax (CGT), income tax, and GST implications, depending on their use. The context and purpose behind acquiring or disposing of crypto assets will determine the applicable tax treatment.

Tax implications: Beyond the Basics

Crypto as a Capital Asset

Crypto assets acquired for purposes of investment would generally be regarded as a capital asset. The cost base — whether determined by the price paid, market value at acquisition, or other means — depends on how the crypto was obtained (e.g., gift, fiat-to-crypto transfer, or sale exchange). This nuance can have significant downstream effects on CGT calculations.

The Business Side of Digital Assets

For businesses engaged in crypto trading, mining, operating exchanges, selling NFTs, or using crypto for transactions, these activities are generally treated as occurring on revenue account.  As such, theses crypto assets would be trading stock of the business. This means that gains from these transactions are typically assessable as ordinary income with losses being deductible, and the assets must be accounted for in accordance with trading stock provisions, including making year-end valuation choices and inventory adjustments.

Companies with an aggregated turnover under $50 million and base rate entity passive income (BREPI) of 80% or less may qualify for a reduced tax rate of 25%. However, correctly classifying crypto-related income — such as net capital gains, interest, or gains on qualifying securities — can impact BREPI calculations, as these three categories are passive under the BREPI rules. Tax agents should pay particular attention to the treatment of airdrops and other crypto-derived income when assessing eligibility for the base rate entity concession.

An emerging issue for companies is the lending of crypto to its shareholder’s wallet/account to enable them to receive airdrops. While this may appear commercially benign, such arrangements can trigger Division 7A consequences.

Note: Paying employees salary and wages with crypto triggers the same tax obligations as paying in cash (including PAYG withholding and superannuation) but also introduces potential FBT considerations where crypto is provided under a salary sacrificing arrangement or in addition to salary and wages. Employers must determine these obligations based on the market value of the crypto at the time of payment.

GST in the Crypto Era: Maximising Your Credits

Entities carrying on an enterprise (not necessarily a business) who are registered or required to be registered for GST are required to remit GST on taxable supplies. Receiving crypto as payment satisfies the consideration requirement under section 9-5(1)(a) of the GST Act. Thus, businesses transacting in crypto for goods and services are making a supply for consideration and are ordinarily required to remit GST.

When it comes to creditable acquisitions paid for with crypto, input tax credits may be claimed. Importantly, the acquisition or disposal of crypto itself is a financial supply and is input taxed —meaning there is no GST liability on the supply of crypto and generally no credits to be claimed on the purchases of related costs. However, GST credits may be available in full if the financial acquisitions threshold (FAT) is not exceeded. If the FAT is exceeded, reduced input tax credits may be available, where otherwise no credits are permitted.

Embracing Change: The Tax Agent’s Role in a Crypto-Driven Economy

Cryptocurrency is no longer a speculative curiosity—it is a dynamic, fast-evolving asset class that is reshaping the way businesses operate and transact. For tax agents, the challenge is not just to keep up, but to anticipate the ripple effects that crypto adoption will have on tax compliance, reporting, and strategic advice. As the regulatory landscape continues to shift, those who understand the intricacies of crypto taxation will be best positioned to guide their clients through uncertainty and opportunity alike.

The question is not whether crypto will impact your clients, but how prepared you are to help them navigate its evolving tax and regulatory landscape.

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