The ATO has issued draft ruling TR 2026/D1, which considers the income tax consequences for Australian resident taxpayers who issue or receive crypto assets as a result of an airdrop.

For taxpayers, the immediate priorities are to correctly classify each crypto activity, keep complete transaction and valuation records, and be prepared for greater ATO visibility as domestic and international reporting requirements expand.

Broadly, crypto assets are digital representations of value that can be transferred, stored or traded electronically. Common examples include cryptocurrencies, investment tokens and non-fungible tokens (NFTs).

An airdrop generally occurs when crypto assets are distributed to a holder’s wallet at no direct cost to the recipient.

The draft ruling considers three key scenarios for both the issuer and recipient of the crypto asset.

1. Airdrops received in the course of a crypto trading business

Where a recipient is carrying on a business of trading crypto assets, the market value of an airdropped asset is generally assessable as ordinary income under section 6-5 of the Income Tax Assessment Act 1997.

This applies even where the airdrop might otherwise appear to be a gift or windfall.

Where the issuer is also carrying on a business of crypto asset trading and holds the relevant assets for sale or exchange in the ordinary course of that business, the assets will generally be treated as trading stock under Division 70.

2. Airdrops received in exchange for goods or services

Where an airdropped asset is provided in return for goods or services supplied by the recipient, the money value of the asset is generally assessable income under section 6-5, regardless of whether the recipient is carrying on a business.

For the issuer, the costs of acquiring or creating crypto assets distributed in exchange for goods or services may be deductible under section 8-1, subject to the usual requirements.

3. Airdrops received by retail investors

Where an individual is not carrying on a business of crypto trading, and the airdrop is not provided in return for services or otherwise connected with an income-producing activity, the market value of the asset will generally not be ordinary income when received.

Instead, CGT event A1 will generally occur when the taxpayer later disposes of the asset.

For the issuer, CGT event A1 occurs when the asset is distributed. Where there are no capital proceeds, as is generally the case with an airdrop, the issuer is generally taken to have received the market value of the asset at the time of the event.

The draft ruling also considers situations where an individual receives an airdrop without their knowledge or consent. Even where the recipient is not carrying on a crypto trading business, a capital gain may arise when the asset is subsequently disposed of.

Where costs are incurred to remove or rectify unwanted assets in a wallet, those costs may form part of the asset’s cost base when determining the resulting capital gain or loss.

The draft ruling also provides guidance on valuing airdropped assets, distinguishing a crypto trading business from a hobby, and applying the rules to a range of practical examples.

 

CARF Is Coming: How Australia’s New Crypto Reporting Framework Will Change Tax Compliance

Australia is set to implement the OECD Crypto-Asset Reporting Framework (CARF) alongside a new domestic crypto reporting regime. The measures are expected to significantly expand the information available to the ATO about crypto transactions.

The measures were announced in the 2025–26 Mid-Year Economic and Fiscal Outlook and are not yet law.

The Crypto-Asset Reporting Framework (CARF) was developed by the OECD as an international reporting framework for crypto assets. It is similar in concept to the existing Common Reporting Standard (CRS), which allows participating tax authorities to exchange information about financial accounts.

Under CARF, crypto-asset service providers will be required to collect information about customers and report details of relevant crypto transactions to tax authorities. Tax authorities can then exchange that information with other participating jurisdictions.

Under CARF:

• Crypto exchanges and certain crypto-asset service providers will be required to report customer information.
• Information will be exchanged internationally between participating tax authorities.
• The ATO will have greater visibility over offshore crypto holdings and transactions.
• Australia’s first international exchanges of CARF data are expected to commence in 2028.

 

What does this mean for taxpayers?

The combination of the ATO’s guidance on crypto transactions and the proposed expansion of reporting requirements means accurate record-keeping is becoming increasingly important for anyone holding or transacting in crypto assets.

Taxpayers should ensure they retain records of transactions, dates, quantities, values and the circumstances in which crypto assets were acquired or disposed of. This is particularly important where assets have been received through airdrops or other transactions where the tax treatment may not be immediately obvious.

If you are unsure how your crypto transactions should be treated for tax purposes, speak with us before lodging your return.