Australia Updates its Capital Gains Tax Guidance to Include Wrapped Tokens and DeFi

Australia’s tax authority has clarified its view that its capital gains tax on crypto products also extends to wrapped tokens or token interaction with decentralized (DeFi) lending protocols, according to an updated guidance.

Last year, the Australian Taxation Office (ATO) warned cryptocurrency investors that capital gains and losses must be reported every time a digital asset, including non-fungible tokens (NFT), is sold. The latest update includes wrapped tokens or many “DeFi “lending” and “borrowing arrangements” or, in general, any time you transfer a crypto asset to an address that you don’t control.

“When you wrap or unwrap a crypto asset, you exchange one crypto asset for another and

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