Crypto tax myth busting: What Australians get wrong every year

As we approach the end of the financial year, confusion around cryptocurrency taxation continues to trip up even the most seasoned investors. From misunderstanding what constitutes a taxable event to relying too heavily on automation, the myths are persistent — and costly.

To help clarify the common pitfalls, I’ve spoken with Patrick McGimpsey, Product Manager at Crypto Tax Calculator, and Nick Christie, Co-founder of Syla, two professionals working on the front lines of crypto tax technology.

Myth 1: “Crypto isn’t taxed until I convert it to AUD.”

This is one of the most widespread misconceptions. Many investors mistakenly believe they only incur a tax liability when converting crypto to Australian dollars. But that’s far from the full picture.

The ATO treats crypto as a CGT (capital gains tax) asset, similar to shares or property. As Patrick McGimpsey explains, a wide range of events can trigger a CGT obligation — not just when you cash out.

This includes:

· Swapping one token for another (e.g., ETH to SOL)

· Buying or selling NFTs

· Depositing into or withdrawing from smart contracts

· Participating in DeFi protocols or liquidity pools

It's a complex environment, and assumptions based on traditional investments often don't hold true in the crypto space.

Myth 2: “Staking rewards and airdrops are just free money.”

It’s easy to see why some view staking and airdrops as “freebies.” But from a tax perspective, they’re typically treated as income at the time of receipt.

Patrick illustrates this well: “If you receive staking rewards into your wallet, they’re taxed based on the fair market value at the time — even if the token later crashes.” For example, if your airdrop was worth $100 at the time it landed and it falls to $10 before you sell, you still owe tax on the original $100. Unfortunately, you can’t offset that loss against the income, which is a particularly challenging nuance in the Australian system.

Myth 3: “Meme coin trading isn’t a tax concern.”

While meme coin trading might seem like speculative fun, it has real tax consequences. Patrick points out that many traders realise a gain on one meme coin and immediately reinvest it — often unaware they’ve already triggered a taxable capital gain.

“It’s important to understand your tax position before June 30,” he says, “so you don’t end up paying tax on profits you’ve technically lost in the next trade.”

Myth 4: “Crypto tax is only complicated if you’re a high-frequency trader.”

According to Nick Christie from Syla, complexity can creep in quickly — even for moderate users. “It’s one thing if you’re just buying and holding on a single exchange,” he notes. “But as soon as you introduce multiple wallets, use on-chain platforms, or transact across several exchanges, tracking becomes far more involved.”

Even automated systems can struggle with cross-platform reconciliation or activity involving wrapped tokens, staking, or Layer 2 networks. Crypto tax tools have improved significantly, but they’re not yet a complete solution for every scenario.

Myth 5: “I’ll just deal with tax at the end of the financial year.”

Procrastination is another trap. Nick emphasises the value of getting organised early — especially when it comes to reconciling your accounts and understanding your obligations. Early preparation doesn’t just reduce stress; it can also uncover opportunities to reduce your tax bill through loss harvesting or better planning.

Myth 6: “Tax tools automate everything.”

While platforms like Syla offer robust automation — and BTC Markets has integrated directly with them — there’s no silver bullet yet. “As soon as you step beyond standard exchange trading and move into complex DeFi or on-chain activity, automation still requires oversight,” Nick warns.

Some final thoughts

Whether you’re an active trader or a long-term holder, understanding your crypto tax obligations is critical. And as the EOFY deadline looms, now is the time to tidy up your records and seek out professional advice.

At BTC Markets, we strongly encourage investors to stay informed and proactive. We also recommend using reputable tax software and consulting qualified professionals who understand the nuances of crypto.