How are NFTs taxed in Australia?

The ATO treats NFTs (non-fungible tokens) as crypto assets for tax purposes. Buying and selling NFTs is subject to capital gains tax, with the same rules that apply to other crypto assets.

When you sell an NFT, you calculate your capital gain or loss as the proceeds minus your cost base (what you paid for it plus any transaction fees). If you held the NFT for more than 12 months, the 50% CGT discount applies. If you acquired it for less than 12 months, the full gain is included in your assessable income.

If you create and sell NFTs as a business, the income is treated as ordinary business income rather than capital gains, and you may be liable for GST if your turnover exceeds $75,000. The key distinction the ATO draws is between investment activity (CGT applies) and business activity (income tax applies). Frequent trading, creating and selling NFTs for a profit motive, or running an NFT marketplace would typically be treated as a business. The cost of creating an NFT (gas fees, platform fees) can be included in the cost base or deducted as a business expense depending on the circumstances.