Trading One Cryptocurrency for Another
Cryptocurrency investors and traders will often sell one cryptocurrency in exchange for another cryptocurrency. For example, you might sell 1 BTC in exchange for 45 ETH. (Notice that this transaction involves no $AUD.)
Whenever you make this sort of transaction, you need to retrieve the $AUD equivalent for the values of the cryptocurrencies involved in the swap.
In regards to the above BTC-to-ETH transaction, you’d need to figure out:
- The $AUD value of the 1 BTC when you acquired it?
- The $AUD value of the 1 BTC when you traded it for the 45 ETH?
You’ll then be able to calculate your capital gain on the sale of 1 BTC in $AUD. The $AUD value of the sale of 1 BTC forms the cost base of your 45 ETH. This cost base will be used in the future should you sell your ETH.
Tax on Cryptocurrency Airdrops
According to the Australian Taxation Office webpage entitled ‘Transacting with cryptocurrency‘ (as at Apr. 5, 2021):
“Some projects ‘airdrop’ new tokens to existing token holders as a way of increasing the supply of tokens (for example, Pundi X and Tron). The money value of an established token received through an airdrop is ordinary income of the recipient at the time it is derived.”