The ATO have updated their guidance on the tax implications of cryptocurrency airdrops on their website, which is consistent with one of the recommendations we made in our blog from September 2021 – taxonchain.com.au/crypto-tax-airdrops-dont-get-caught-out-at-tax-time.
Per the new guidance, airdrops from an initial token distribution are not ordinary income. However airdrops from an already established token will still be treated as ordinary income at time of receipt.
A good example of both rules applying to the same token are the Optimism ($OP) airdrops. Under the new guidelines, the initial $OP airdrop would not be deemed as ordinary income and will adopt a cost base of $0. In addition to the initial airdrop, Optimism have decided to allocate 14% of their token supply to future airdrops. These future airdrops will need to be treated as ordinary income for tax purposes as $OP would be considered an ‘established token’ by the ATO.
As the crypto economy is a fast evolving industry, the crypto accountants at Tax On Chain aim to provide you with the latest news and updates regarding crypto tax in Australia. Please feel free to get in touch with the cryptocurrency tax team today to help you sort out your crypto tax obligations.
