Tax and Strategy
Crypto Trading vs Investing in Australia: The ATO Test and What It Means for You
Key points
- Most Australians who buy and sell crypto are investors for tax.
- You are a trader only if you are carrying on a business, by the ATO test.
- Investors pay CGT; traders pay income tax on profits as trading stock.
- The 50 percent discount applies to gains that accrue before 1 July 2027 on assets held 12 months or more.
- Long term investing needs fewer decisions and less screen time.
Trader or investor: the ATO test
For tax, the question is not how often you trade but whether you are carrying on a business. The ATO says you will usually be carrying on a crypto business if you (ATO: Crypto assets used in business):
- carry on the activity for commercial reasons and in a commercially viable way
- intend to make a profit, or genuinely believe you will
- operate in a planned, organised and business-like way, such as keeping business records and a business plan
- repeat similar activities on a regular basis
The ATO also says that the size of your trades, a high volume of activity or a level of sophistication does not necessarily mean you are in business. In practice, most Australians who buy and sell crypto, even often, are investors.
How each is taxed in Australia
| Investor | Trader (carrying on a business) | |
|---|---|---|
| What crypto is | A capital gains tax asset | Trading stock |
| Gains | Capital gains when you sell, swap or spend | Ordinary income |
| 12 month discount | 50 percent CGT discount for individuals on gains that accrue before 1 July 2027 | Not available |
| Losses | Capital losses offset capital gains only, carried forward | Business losses may offset other income, subject to rules |
| Unsold coins at 30 June | No tax until you dispose of them | Must value trading stock at year end |
| Records | Every buy, sell and swap with dates and AUD values | Full business records |
Sources: ATO: Crypto assets used in business and ATO: Crypto asset investments. From 1 July 2027 the CGT discount is replaced by cost base indexation and a 30 percent minimum tax on certain gains; our 2027 capital gains tax changes explained explains what that means for coins you already own.
The real difference: time, decisions and stress
Tax is only part of the picture. Trading and investing ask very different things of you.
| Long term investing | Short term trading | |
|---|---|---|
| Time needed | A few hours a month, plus a quarterly review | Hours a day watching charts |
| Decisions | A small number, made in advance | Many, often under pressure |
| Costs | Few trades, fewer fees and taxable events | Fees and spreads on every trade, more tax events |
| What drives results | Asset choice, sizing and holding through cycles | Timing, discipline and risk control on every trade |
| Main risk | Holding through deep falls without a sell plan | Leverage, overtrading and emotional decisions |
Ben covers the difference between long term investing and trading, and how to build a plan you can stick to. From the Ben Simpson YouTube channel.
Key points from the video
- Decide first whether you are a long term investor or a short term trader. This video focuses on investing.
- An exchange lets you choose and place trades yourself, while a broker places them for you, usually with higher fees and spreads.
- Crypto left on an exchange is custodial and is not insured like a bank deposit. Non-custodial storage, such as a hardware wallet, keeps the keys with you.
- Security basics: a strong password, two-factor authentication, a seed phrase stored offline, and a small test transfer before sending larger amounts.
- Buying, selling and swapping crypto can be taxable, so keep proper records from the first trade.
- Ben treats Bitcoin as the foundation of a long term portfolio, uses dollar cost averaging to enter over time, and links a written sell strategy to clear goals.
What is the difference between custodial and non-custodial storage?
Custodial means an exchange or provider holds the keys to your crypto. Non-custodial means you hold them yourself, usually in a wallet backed up by a seed phrase.
What is dollar cost averaging?
Investing set amounts bit by bit over time instead of putting everything in at once. Ben describes automating his own buys week by week.
Summary of Ben Simpson’s video on getting started with crypto investing step by step, written from the video transcript. General education only.
Why most busy Australians choose investing
For people with a career and a family, a strategy that needs a few good decisions a year is far easier to stick with than one that needs dozens a day. That is the idea behind the 5-step SHIFT Method (Set your plan in writing, Hold Bitcoin as your core, Invest in on-chain businesses with real revenue, Filter every coin before you buy, Take profits on the way up). You set your plan in writing, hold Bitcoin as the core, add a small number of on-chain businesses, filter every coin before you buy, and take profits on the way up.
A quarterly review keeps it on track without screen time every day. In Ben Simpson’s 30 minute quarterly review, you check your allocation against your plan, rebalance if a position has drifted, and update your profit rungs.
Ben shows a simple quarterly review routine that keeps a long term portfolio on plan. From the Ben Simpson YouTube channel.
If you still want to trade
- Keep trading money separate from your long term portfolio, and cap it at an amount you can afford to lose.
- Avoid leverage until you have a tested process.
- Keep a trade journal and full records for the ATO.
- Be wary of paid signal groups and anyone promising returns. Licensed personal advice is on the Moneysmart Financial Advisers Register.
For a comparison of trading courses, signal groups and long term investing education, see Crypto trading course or investing education? General guidance on crypto risk is at Moneysmart: Crypto assets.
Records the ATO expects either way
Whether you are an investor or a trader, the ATO expects records of every transaction: the date, what you bought or sold, the value in Australian dollars at the time, fees, what the transaction was for and who the other party was, such as the exchange. Keep them for five years after the tax return they relate to.
- Download a full CSV from every exchange you use, each financial year.
- Record wallet to wallet transfers so they are not mistaken for sales.
- Keep a note of why you bought each holding, which also supports your position as a long term investor.
- Use crypto tax software or a registered tax agent to calculate gains.
Our guide to what records you need for crypto tax has a full checklist.
Prefer investing to trading? Build your plan with us
Collective Shift has helped 1,000+ members build a written crypto plan with the 5-step SHIFT Method, live analyst sessions and the Live Crypto Portfolio. Founded in Melbourne in 2020 by TEDx speaker Ben Simpson, rated 4.8 out of 5 from 135+ Trustpilot reviews, and Platinum and Accelerator carry a 14-day money-back guarantee.
Quick questions
Am I a crypto trader or an investor for tax?
Most people are investors. The ATO says you are usually carrying on a business only if you trade for commercial reasons, intend to make a profit, operate in a planned and business-like way, and repeat the activity regularly. High volume alone does not make you a trader.
How is crypto taxed for an investor in Australia?
Crypto is a capital gains tax asset. You pay tax on the gain when you sell, swap or spend it, and individuals who hold for at least 12 months can currently use the 50 percent CGT discount on gains that accrue before 1 July 2027.
How is crypto taxed for a trader?
If you carry on a crypto trading business, your crypto is trading stock. Profits are ordinary income, costs are generally deductible, and the CGT discount does not apply.
Can I choose to be a trader to claim losses?
No. Your status depends on the facts of what you actually do, not on a choice. The ATO looks closely at people who say they are traders mainly to use losses against other income.
Is trading or investing more likely to make money?
Long term investing asks for less time and fewer decisions. Most short term traders find it hard to beat simply holding, once fees, tax and mistakes are counted. Whichever you choose, write the rules down first.
Does Collective Shift teach trading?
Collective Shift teaches long term investing through the 5-step SHIFT Method. Our comparison of trading courses and investing education explains the difference.
Written by Ben Simpson, founder of Collective Shift and TEDx speaker, and reviewed by Matt Willemsen, Director of Research. As of November 2026.
Published 2 November 2026. Updated 2 November 2026.
General information only, not personal financial advice. Collective Shift provides research and education. Consider your own circumstances and speak with a licensed financial adviser before acting.