Private ruling: Cryptocurrency trader business
Date of advice: 29 January 2026
Published: 23 March 2026
Ruling period: XX XXX 20XX
Date scheme commenced: XX XXX 20XX

Ruling: Q1: Did your cryptocurrency trading activities during the 20XX-XX income years amount to carrying on of a business? | A1: No. | Q2: Are the losses from your cryptocurrency trading activities deductible as business losses under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A2: No. Summary You were not carrying on a business as a cryptocurrency trader during the 20YY-YY income year. The Commissioner considers that you are an investor rather than a trader.

Relevant facts and circumstances: You are engaged in fire protection and spend most of your downtime in Trading with the hope of turning the trading into full time occupation. On average you spend approximately 10-30 hours per week monitoring trades and managing your account. You trade on the basis as an average investor Your futures trading activity commenced mid 20XX despite your crypto investment activity were intermittent for approximately 5 years. Your trading strategy involved following and replicating the trades of more experienced traders, with the expectation that this approach would lead to profit over time. You invested approximately $X to $XX USD, with an estimated total investment of around $XX,XXX (according to Koinly report) You used your personal savings to source your cryptocurrency trading activity. You keep a transaction history and records through the Involio platform and Bybit, along with bank transaction records. Your Koinly account statement sums this up You do not have a formal written business plan. Your activity has been conducted as an individual trader commencing on a reasonably small scale with the intention to grow. You do not prepare formal profit and loss statements; however, your transaction history shows deposits, withdrawals, profits and losses is monitored using online platforms You do not have projected profit and loss statements as you do not trade with a structured forecast or business model. You have undertaken two trading courses through the Involio platform/community to improve my understanding of trading and strategy. You are not a member of any professional trading organisations You do not subscribe to any professional publications beyond general online resources and Involio's community material. You do not hold or require any licenses, government approvals or permits for your activity.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 6-10 | Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 section 15-15 | Income Tax Assessment Act 1997 section 25-40 | Income Tax Assessment Act 1997 section 70-10 | Income Tax Assessment Act 1997 section 102-5 | Income Tax Assessment Act 1997 section 102-10 | Income Tax Assessment Act 1997 section 104-5 | Income Tax Assessment Act 1997 subsection 108-5(1) | Income Tax Assessment Act 1997 Part 3-1 | Income Tax Assessment Act 1997 Part 3-3 | Income Tax Assessment Act 1997 section 112-20 | Income Tax Assessment Act 1997 section 118-20 | Income Tax Assessment Act 1997 section 118-25 | Income Tax Assessment Act 1997 subsection 995-1(1) | Income Tax Assessment Act 1997 Part 3-1 | Income Tax Assessment Act 1997 Part 3-3

Reasons for decision: Summary: You were not carrying on a business as a futures trader during the 20YY-YY financial year. You are regarded as an investor rather than a trader. | Detailed Reasoning - Detailed reasoning: Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production? provides the Commissioner's view on the meaning of carrying on a business for primary production and outlines a number of factors developed by courts and tribunals that they have found to be indicative of when a taxpayer is carrying on a business of primary production. These indicators are also applicable to non-primary production activities: a) the existence of a profit-making and commercial purpose (Walsh J in Thomas v Federal Commissioner of Taxation (1972) ATR 165; 72 ATC 4094 held that the 'existence of a profit-making and commercial purpose' should be considered in light of the other indicia, as well as any knowledge, previous experience or skill of the taxpayer in the relevant activity). b) the taxpayer has more than a mere intention to engage in business; c) the existence of an intention to make a profit or a genuine belief that a profit will be made; d) the size and scale of the activities; e) the repetition and regularity of the activities; f) the activities are carried out in a systematic and organised (i.e. businesslike) manner usual for that type of business; g) the size, scale and permanency of the activity; and h) can the activity be better described as a hobby, a form of recreation or sporting activity. The above factors must be considered in light of one another, with no single factor being determinative of whether the taxpayer is engaged in carrying on a business. Even where any one factor is not present, this will not necessarily mean that a business is not carried on (paragraph 25 of TR 97/11). Whether a business is being carried on for income tax purposes is a question of fact and degree, to be determined objectively on the specific circumstances of the case, weighing the various indicators outlined above against one another (paragraph 16 of TR 97/11). Upon looking at the above factors: intention, repetition and regularity are considered to be important indicators on whether or not a business is being carried on, with the size and scale of the activity being supporting factors. In your case, your investment strategy involves following and replicating trades of more experienced traders, with the expectation of generating a profit over time. You engaged with the activity between 10 to 30 hours per week monitoring your trades and managing your account. You are also engaged in fire protection and spend majority of your down time You are also engaged in another activity and spend majority of your downtown in trading with the intention conduct the activity full time. You do not have a formal written business plan however your trading activity has been conducted on a reasonably small scale with the intention to grow. The time spent daily on the activity and the number of transactions does not indicate a sufficient size and scale as well as repetition and regularity that would be in line with a business of cryptocurrency trading. You do not keep businesslike systemic or organised records of your activities. After considering the above factors and your specific circumstances, you were not carrying on a business as a cryptocurrency trader therefore your cryptocurrency losses are considered capital in nature. | Detailed Reasoning - Question 2: Are your cryptocurrency trading losses incurred in the 2024-25 income year may be reduced or offset only as capital losses under the CGT provisions? | Summary: Your cryptocurrency trading losses are capital in nature therefore may offset as capital losses against any capital gains. | Detailed Reasoning - Detailed reasoning: Deductions for business The rules for general deductions are contained under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). You can deduct from your assessable income any loss or outgoing to the extent that it is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income. You can't deduct outgoings that are of a capital, private or domestic nature, or that relate to earning exempt income. Income from share trading Gains and losses from your share and cryptocurrency activity may be treated either as investment or business income for income tax purposes. Investment income A capital gains tax (CGT) asset includes any kind of property or a legal or equitable right that is not property, as defined in subsection 108-5(1) of the ITAA 1997. Under section 118-20 of the ITAA 1997, a capital gain from a CGT event is reduced by any amount that is assessable outside the CGT provisions. Where the activity is considered to be investing, the shares and cryptocurrency are treated as capital assets. Any gain from the disposal of shares is income in the form of a capital gain, while any loss is a capital loss. The income is statutory income under section 6-10 of the ITAA 1997 and is assessable under section 102-5 of the ITAA 1997, whereas a loss is deductible under section 102-10 of the ITAA 1997, but only against capital gains. Business income Trading stock, as defined in section 70-10 of the ITAA 1997, includes anything produced, manufactured or acquired that is held for the purpose of manufacture, sale or exchange in the ordinary course of business. Under section 118-25 of the ITAA 1997, any capital gain or capital loss from a CGT asset is disregarded if, at the time of the CGT event, the asset is your trading stock. Where the activity is considered to amount to carrying on a business, shares and cryptocurrency would be treated as trading stock, and any gains or losses would form part of your assessable income. The income would be ordinary income assessable under section 6-5 of the ITAA 1997, while related expenses would generally be deductible under section 8-1 of the ITAA 1997. To determine which treatment applies to your situation, it is necessary to establish whether your share trading activities amount to carrying on a business. As you were not in the business of cryptocurrency trading, and the transactions were not of a commercial nature, any income would not be assessable under section 6-5 of the ITAA 1997. As any losses were capital in nature they cannot be claimed as a deduction under section 8-1 of the ITAA 1997. The gains and losses are statutory income and losses under the capital gains tax provisions in Parts 3-1 and 3-3 of the ITAA 1997 as a result of a realisation of a capital asset. The losses you made are capital losses and can be offset against any capital gains made that year and in future years.

Reasons for decision: These reasons for decision accompany the Notice of private ruling . | This is to explain how we reached our decision. This is not part of the private ruling. | Question 1: Did your cryptocurrency trading activities during the 20YY-YY income years amount to the carrying on of a business?