Crypto mining taxes can get tricky in Australia for hobbyist miners, being taxed very differently from other crypto activities.
The first step to report crypto mining rewards is to assess your status, either as a business or hobbyist, and then follow the requirements to report those newly mined coins.
Ready to learn how to do it correctly? Let’s cover the distinction between being a mining business versus a hobbyist miner, how crypto mining rewards are taxed, how to report your crypto taxes in Australia, and much more!
KEY TAKEAWAYS about Crypto Mining Tax in Australia
- In Australia, if you’re engaging in a very frequent and structured crypto mining operation, you’ll likely fall under a business for tax purposes, leading to corporate taxes on mined coins.
- If you sporadically earn rewards from crypto mining, you’ll likely fall under a hobbyist classification for tax purposes.
- If you’re a hobbyist miner, you’ll be taxed under capital gains taxes in Australia when you sell your mined coins.
- The easiest way to track the Fair Market Value (in AUD) of your crypto mining rewards and the gains/losses on each sale is with a crypto tax calculator like CoinTracking.
What is Crypto Mining?
Crypto mining is the process of validating transactions in a blockchain network, leading to the creation of new units of a cryptocurrency from that network. The computing power to validate each transaction, proving the work to add a new block to the chain, leads to the creation (as a reward) of a new unit of a cryptocurrency.
Crypto mining is the process of securing a chain under Proof-of-Work (PoW) protocols, the consensus mechanism for these chains. An example of PoW cryptocurrency is Bitcoin, the original cryptocurrency, can be mined to produce new coins, maintaining its decentralized nature while securing its network.
Your Crypto Portfolio Manager
Crypto Mining as a Hobby or a Business: Tax Differences
In Australia, the distinction between the nature of the crypto mining activity is essential to determine its tax consequences. If you’re engaging in a frequent activity, under a professional setting, and receiving several batches (and in high volume) of crypto mining rewards, you’re likely running a professional setup for crypto mining, operating like a business. In that case, you'll be treated as such, with crypto mining rewards leading to business taxes, with the ability to present deductible expenses, following corporate requirements for tax returns, etc.
On the other hand, if you engage in crypto mining in a sporadic manner, meaning some rewards but in a nonprofessional manner (less frequent), you’ll likely be classified as a hobbyist miner. This will lead to personal taxes on your crypto mining rewards. Let’s see how they'll be taxed, under income taxes or crypto trading taxes (i.e., capital gains taxes).
How are mining rewards taxed?
Unlike other crypto activities, that are taxed at the moment the individual receives the rewards (e.g., airdrop) and that income goes towards their taxable income for the year, crypto mining rewards for hobbyists do not follow this method.
Crypto mining rewards are taxed at a capital gains tax only when you end selling your rewards after receiving them. You’re not taxed on an income level based on the Fair Market Value (in AUD) of the rewards when you received them. You still need to calculate the Fair Market Value of the crypto mining rewards for reporting purposes and gains calculations, but that’s not the amount that will count towards your taxable income. Let’s check what is taxed and how.
Capital Gains Tax
Crypto mining rewards are subject to capital gains taxes in Australia, based on the difference between the sales proceeds (total amount of the sale of your crypto mining rewards) and the Fair Market Value of those rewards (their value at the time you received them). That gain will count towards your total taxable income in Australia and be taxed according to your income tax bracket.
Income Tax
In Australia, hobbyists need to calculate the gains when selling their crypto mining rewards (when they sell them, not when they received them) and only that gain counts toward the total taxable income for that year. Your crypto tax rate will depend on which income tax bracket you fall under. Here are the income brackets in Australia for 2025:
Are Mining-Related Costs Tax-Deductible in Australia?
If you’re classified as a hobbyist for tax purposes related to your crypto mining activity, you’ll not be able to deduct expenses from it. On the other hand, if you’re a business operating in the crypto mining industry, you’ll be able to follow the usual tax-deductible expenses related to that activity.
How to Report Crypto Mining on Your Tax Return
The first step to report your crypto mining rewards is to correctly determine your capital gains on all the sales of mined coins that you had in that tax year.
You need to deduct the Fair Market Value of those rewards (market value when you received them) from the total sales proceeds of when you sell your rewards.
In Australia, the Australian Tax Office (ATO) accepts the following accounting methods to calculate the gains correctly across batches: FIFO (First-In, First-Out), HIFO (Highest-In, First-Out), and LIFO (Last-In, First-Out).
Crypto mining taxes must be reported by October 31st each year, covering trades and disposals made between July 1st and June 30th of the previous financial year.
In Australia, you can report your crypto mining gains by using an online government service, myTax, or by paper forms: tax return for individuals and the supplementary section.
How to Minimise Your Crypto Mining Taxes
You can legally reduce your Australian crypto mining rewards if you follow these strategies:
- Hold crypto for over 12 months before selling: Since you’re taxed on your crypto mining rewards when you sell them, if you hold them for over 12 months before doing so, you can enjoy a 50% discount on your taxable gains. This is the most straightforward way to legally lower your crypto tax bill in Australia.
- Sell in low-income years: If you have fluctuations on your yearly income due to the nature of your job, a great way to pay less tax by falling into a lower income tax bracket is to realize any gains from mined coins in years when you have less income from other sources.
- Offset your crypto mining gains with other losses: If you have capital losses from other assets, you can deduct those capital losses when you realize gains from selling your crypto mining rewards, effectively avoiding crypto taxes.
Creating a Crypto Tax Return Made Easy
Conclusion about How Crypto Mining Is Taxed in Australia
Keeping proper records of your transactions including crypto mining rewards is essential to accurately report your crypto taxes, from the moment you receive those rewards to when you sell them.
In Australia, you’ll always have to recognise the Fair Market Value of your crypto mining rewards and then the gain/loss when you sell them to do your Australian crypto taxes.
The easiest way to keep track of the fluctuating prices of your mined coins is to do it automatically by importing your trades and generating tax reports with a crypto portfolio tracker like CoinTracking.
Note: This article is for informational purposes only and does not constitute financial or tax advice. Always consult with a professional before making any decisions.
Frequently Asked Questions about Crypto Mining Taxes Australia
What happens if I don’t report my mining rewards?
You can face legal consequences for not reporting your crypto taxes or crypto mining rewards in Australia, from fines to penalties.
How much tax do I need to pay on mining rewards?
You need to pay capital gains taxes on the gain you had when you sold your crypto mining rewards in Australia.
What’s the difference between hobby and business mining?
A hobbyist is someone who sporadically earns some income from crypto mining, while a business runs a professional and frequent crypto mining operation.
