Tax on Staking Rewards

Nov, 2021

Matt Byrne

Matt Byrne



Crypto investors can ‘stake’ their coins or tokens in return for rewards, generally in the form of additional coins or tokens.  Investors need to understand the tax consequences that arise as a result of receiving the staking rewards to make informed decisions and plan for tax liabilities.

In Detail


Holders of certain coins and tokens (we’ll call these ‘crypto assets’ for the purposes of this article) may be able to ‘stake’ their crypto assets in return for rewards, generally in the form of additional coins or tokens.  The staked crypto asset may be used to validate transactions in a network that uses a proof-of-stake consensus mechanism (i.e. Ethereum 2.0, Cardano, Solana etc) or as part of broader tokenomics.

The rewards received for staking your crypto assets are akin to receiving interest on a term deposit and will be treated as income when received.  The amount of the income is equal to the Australian dollar equivalent of the rewards when received so it is important to maintain accurate records to be able to identify the value.

As an example, assume you have 1,000 ADA and you want to stake this so you delegate your 1,000 ADA to a pool.  At the date of this article the APY for the Cardano network is 4.6083% so if you staked your ADA for a period of one year, you would receive 46.083 ADA in staking rewards.  The Cardano network operates on epochs of five days so you would receive approximately 0.63 ADA every five days for staking your 1,000 ADA.  Assuming the ADA price is $2.15 at the first epoch, you would need to include $1.35 in your income (being the 0.63 ADA received as a staking reward multiplied by the Australian dollar value of $2.15 on the day you received the ADA).


If you were to subsequently sell the coins or tokens you receive as a reward for staking you will need to calculate the resulting gain or loss.  The cost base of the rewards received will generally be equal to the amount you included in your income.  Taking the above example, the 0.63 ADA received would have a cost base of $1.35.  If it were sold the next day for $1.50 you would have a gain of $0.15 that you may need to report in your income.


Reach out to our team for more detailed information or assistance with your crypto tax obligations.

The taxation of digital assets such as cryptocurrency is an evolving space and the tax consequences arising on transactions involving cryptocurrencies may change.
This article has been prepared for informational and discussion purposes only.  This article is of a general nature and does not replace consultation with a qualified accountant.  This article should not be regarded as advice and Day One Advisory accepts no responsibility to any person who acts or relies in any way on this article.



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