When I first started staking crypto, I thought, “Great! Free passive income.” What I didn’t think about? Tax.
Like many Aussies in crypto, I assumed staking was tax-free — until I looked into what the Australian Tax Office (ATO) actually says. Spoiler: staking rewards are taxable, and if you’re not careful, you could be setting yourself up for a nasty surprise at tax time.
So in this guide, I’m breaking it down based on my own experience, what I learned from my accountant, and how I (and a few friends) handle it in real life.
What Is Crypto Staking?
Before we get into tax, let’s quickly define staking.
Staking is the process in which you stake some of the cryptocurrencies (E.g. ETH, ADA, SOL, etc.) to help maintain the network and get rewards. It’s kind of like earning interest — except you’re helping validate transactions.
There are two common ways people stake:
- Directly on-chain like solo staking ETH or delegating ADA
- Through an exchange or staking platform (Binance Earn, Coinbase, Ludo, etc.)
In both cases, the ATO treats rewards as income, not just a bonus.
What the ATO Says About Crypto Staking
According to the ATO’s official guidance, staking rewards are treated as ordinary income at the time you receive them.
That means:
- You must declare the fair market value in AUD of the tokens you received
- The date of receipt matters — not when you sell
- You’ll pay income tax on the staking rewards, even if you never sell them
Example:
Let’s say you’re staking 5 ETH and earn 0.1 ETH as a reward in July 2025.
- On the day you receive it, 0.1 ETH = $450 AUD
- You must declare $450 as income for that financial year
- Even if you hold the ETH and don’t sell it, it’s still taxed as income
Later, if you sell that 0.1 ETH, you may also have to pay capital gains tax (CGT) — yes, you can be taxed twice on the same coin:
- Once as income when received
- Again as CGT when you sell
My Personal Wake-Up Call
I started staking ADA through Yoroi wallet back in 2021. The rewards seemed small at first — just a few bucks a week. But by tax time, I had over 500 ADA in rewards.
I didn’t track when they came in, didn’t record the prices, and didn’t know I was supposed to declare every single ADA as income at market value on the day received.
When I finally sat down with an accountant, I had to backtrack months of data, hunt down daily prices, and fix everything. It was a mess — and the ATO doesn’t accept “I didn’t know” as an excuse.
How to Report Staking Rewards on Your Tax Return
Here’s how I now handle staking income each year:
1. Track each reward as it’s received
I use Koinly to connect my wallets and automatically log staking rewards, with AUD value at the time of receipt. Other good tools like CryptoTaxCalculator, CoinTracking or CoinLedger.
2. Declare as “other income”
On your tax return, staking rewards go in the ‘Other Income’ section. They are taxed at your individual marginal rate (not CGT rates).
3. Calculate capital gains separately
If you later sell the staked coins, treat it like any other disposal. If you held them for over 12 months, you might get the 50% CGT discount — but that depends on when the reward was received and when it was sold.
Do You Always Have to Pay Tax on Staking?
Short answer: Yes — if you’re a tax resident in Australia.
The ATO considers staking income taxable the moment it’s earned, even if:
- You don’t withdraw the rewards
- You don’t convert them to fiat
- You leave them compounding on-chain
It doesn’t matter. The ATO sees it as income you controlled from the moment it was credited to your wallet.
Restaking or Compounding? It’s Still Taxable
Many platforms offer auto-compounding or restaking, where your rewards are automatically added to your staked balance.
It might feel like one seamless action, but tax-wise:
- The newly issued rewards are still treated as income at time of issuance
- Even if they’re instantly restaked, you must declare them separately
One of my friends ignored this for months and now has to retroactively declare dozens of tiny restake transactions. It adds up.
What If You’re Not Actively Staking — But Earn Yield?
This part gets tricky.
Some platforms (like Binance or KuCoin) offer what they call “Flexible Earn” or “Savings,” which aren’t technically staking but pay interest-like returns.
The ATO treats most of these similarly to staking:
- If you’re earning yield (whether from staking, lending, or DeFi protocols), it’s assessable income
- You still need to track and declare the value in AUD when received
So whether you’re staking SOL, farming USDC in DeFi, or earning APY on BTC, assume the ATO wants to know about it.
Can I Offset My Staking Income with Losses?
Unfortunately, no — you cannot offset income with capital losses.
If your staking rewards are taxed as income, losses from selling other coins can’t reduce your tax on staking.
However, when you eventually sell the staking rewards, capital losses can offset the CGT portion.
How I Manage Staking Tax Smarter Now
After learning the hard way, here’s how I keep it all clean and compliant:
- I use a crypto tax tool to log staking rewards in real-time (Koinly is my go-to)
- Set a reminder at EOFY (end of financial year) to export all staking income totals
- Avoid high-frequency staking rewards (some platforms reward every few hours—it’s too messy)
- Keep staking rewards in a separate wallet, so I don’t mix them with other coins
- Discuss DeFi/ETH staking with an accountant to stay up-to-date on changing rules
ATO Is Watching — No Joke
In 2024, I received an ATO notice asking me to review my crypto activity. I wasn’t audited, but they had data from Binance and Coinbase tied to my TFN. It was a clear reminder: the ATO is watching.
They now get data directly from most centralized exchanges. So if you think small staking rewards don’t matter — think again. Even $100 in staking income can trigger a compliance flag if undeclared.
FAQ
1. Do I pay tax on staking reward in Australia?
Yes. ATO considers staking rewards as normal income when it receives it. You must declare the AUD value of your rewards in your annual tax return.
2. How is crypto staking income calculated for tax purposes?
The value of each staking reward is determined by reference to the fair market value in AUD of such staking reward at the time it is received by you. This money is added to your income for that financial year for tax purposes.
3. Do I also pay capital gains tax (CGT) on staked crypto?
Yes. You might be considered to have a capital gains tax event whereby you sell, swap or spend your staking rewards at a later point in time. And another possibility is that you should qualify to have the 50 percent CTT discount applied to them should you keep them longer than 12 months.
4. Do Binance and Coinbase have the same treatment as staking?
Yes. It does not matter whether you are staking via an exchange such as Binance, Coinbase, or on-chain, the tax treatment will apply. The ATO makes no distinction on the basis of the platform, rather that on the basis that income is received.
5. What if my staking rewards are automatically restaked?
Even if your rewards are automatically compounded or restaked, the ATO still sees each reward as assessable income when it’s issued. You must track and report them accordingly.
6. Can I avoid paying tax if I don’t withdraw the rewards?
No. the tax is not only levied when you withdraw or sell the rewards but when the rewards are received or available to you.
7. Do staking rewards attract different taxes to airdrops?
Yes. Airdrops and staking are taxed under different categories. Staking rewards are treated as income from effort or participation, while airdrops may fall under windfall gains or other categories depending on how and why they were received.
8. Can I use capital losses to offset staking income?
No. You cannot offset staking income with capital losses. However, if you later sell the staking rewards, you can offset any CGT with your capital losses.
Final Thoughts
Crypto staking is a great way to earn passive income — but that income comes with tax responsibilities. The ATO sees staking rewards as taxable income when received, and if you later sell them, that triggers capital gains tax too.
Here’s my personal advice:
- Track your staking rewards
- Declare them each year
- Use proper tools
- Talk to a crypto-aware accountant
Because trust me — fixing it later is way harder than getting it right the first time.