Australia: Draft guidance on cryptoassets
Draft guidance on specific income tax matters relating to cryptoassets.
The Australian Taxation Office (ATO) on August 19, 2026, released draft guidance on specific income tax matters relating to cryptoassets—draft Taxation Ruling 2026/D1 (receipt and disposal of cryptoassets by an airdrop) (Draft Ruling) and draft Taxation Determination 2026/D2 (CGT consequences of using a smart contract to wrap and unwrap cryptoassets) (Draft Determination).
TR 2026/D1
The Draft Ruling considers the position of both the issuer and recipient of airdropped cryptoassets. It does so for those carrying on a business of cryptoasset trading as well as those who are on capital account.
The Draft Ruling states that taxpayers who are not carrying on a crypto trading business and who do not receive air dropped cryptoassets as a reward for services are not taxed on the value of the cryptoassets received. In addition, the untaxed market value at the time of receipt will be the first element of the cost base of those cryptoassets for capital gains tax (CGT) purposes and relevant for any future disposal of the airdropped cryptoassets.
TD 2026/D2
The Draft Determination considers the CGT consequences of wrapping and unwrapping of a cryptoasset via a smart contract. The Draft Determination uses ETH and WETH to illustrate that wrapping ETH to WETH via a smart contract results in a CGT event occurring in relation to the ETH.
The CGT loss ordering rules and the 30 percent minimum tax on capital gains bring a new dimension to both the conclusion that multiple capital gains and losses arise on wrapping and unwrapping as well as to the capital/revenue characterization of crypto transactions more generally.
CGT changes from July 1, 2027
The CGT loss ordering rules and the 30% minimum tax on capital gains brings a new dimension to both the conclusion that multiple capital gains and losses arise on wrapping and unwrapping as well as to the capital/revenue characterization of crypto transactions more generally.
The conclusion that a capital gain (or loss) arises on both wrapping and unwrapping will mean taxpayers will make a greater number of gains and losses than would be the case if one of the alternative views set out in the Draft Determination were adopted.
The CGT changes from July 1, 2027, will require any capital losses that arise to be applied in order against specific categories of capital gains. This will mean short-term capital losses on cryptoasset transactions must be applied to reduce any deferred discounted gains in priority to other gains.