Topic: Profit motive puts crypto trades on revenue account

Last reviewed: 18/12/2025

Focus: Accounting Practice Analysis

Profit Motive & Crypto: Revenue Account (ATO 2025)

A profit motive can put crypto trades on revenue account in Australia because, where a taxpayer is carrying on a business of trading or otherwise entering transactions with a commercial purpose of profit, the ATO and the courts commonly characterise gains as ordinary income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) rather than capital gains under the CGT provisions. In practice, it is not the label “investor” or “trader” that determines the result, but the objective facts—especially intention/purpose, repetition, system, turnover, and business-like conduct—supported by contemporaneous evidence.

Featured Answer: Profit motive is a central indicator that crypto activity is on revenue account, but it is not decisive on its own. Where the overall facts show a business of trading or a profit-making undertaking (repeated, organised buying and selling with a commercial plan), gains are typically assessable as ordinary income under ITAA 1997 s 6-5; if the facts instead show long-term investment, gains are generally dealt with under the CGT rules.

What does “revenue account” mean for crypto trades in Australia?

“Revenue account” means the crypto gains and losses are dealt with under ordinary income principles (rather than primarily under the CGT regime), so the tax outcome follows trading/business concepts and profit-making purpose doctrines.

From an Australian accounting practice perspective, the consequences typically include:

Tax characterisation: Profits are generally ordinary income (ITAA 1997 s 6-5).
Timing: Profits are generally assessable when derived (depending on method—cash/accruals—and the circumstances).
Record-keeping expectations: Evidence of systems, policies, and trading methodology becomes critical.
Losses: Losses may be on revenue account (subject to general limitations), rather than being quarantined as capital losses.

The ATO’s public guidance makes clear that crypto tax outcomes depend on the nature of the activity and intention, and that cryptocurrency is treated as a CGT asset in many investor cases—but that business/trading cases can be different. See ATO guidance on “cryptocurrency” and “investing vs trading” style analysis in its crypto webpages and rulings framework (ATO website).

Is a profit motive enough to put crypto gains on revenue account?

No—profit motive is highly influential, but it is not sufficient by itself; the legal question is determined by the totality of objective circumstances.

In Australian tax law, a profit purpose is a key factor in two common revenue pathways:

Business of trading: where the taxpayer is carrying on a business; profits are ordinary income under ITAA 1997 s 6-5 (and potentially stock-like concepts by analogy, depending on facts).
Profit-making undertaking or plan (isolated transactions): where the taxpayer is not otherwise in business, but enters a transaction with a commercial profit-making purpose; profits can still be ordinary income under ITAA 1997 s 6-5 (principles reflected in TR 92/3 on isolated transactions and other ATO guidance).

Authoritative ATO sources to anchor your analysis include:

TR 97/11 (indicators of carrying on a business): used broadly across industries to assess whether activities amount to a business.
TR 92/3 (profits from isolated transactions): where profit-making intention and commercial character may bring a transaction to revenue.
ATO cryptocurrency guidance: emphasises fact patterns (investing vs business) and the need to evidence intention and behaviour.

How does the ATO determine whether crypto is trading stock or an investment?

The ATO does not apply a single “bright line” rule; it assesses the facts against business indicators and profit-making principles.

From a practice viewpoint, the ATO’s approach tends to pivot on the following evidence categories:

Purpose/intention at acquisition: Was the dominant intention to resell at a profit in the short term, or to hold as a longer-term investment?
Repetition and regularity: Frequent trades, repeated turnover, and continuous activity support revenue character.
Business-like systems: Use of trading plans, risk settings, formal strategies, journals, reconciliations, and performance reporting supports a business inference.
Scale and capital committed: Higher volumes, larger balances, and use of leverage/margin can support commerciality (not determinative, but influential).
Time devoted and expertise: Significant time spent monitoring markets, executing strategies, and managing positions supports business character.
Record keeping and accounting treatment: Consistent, contemporaneous books and reconciliations (including exchange statements, wallet tracking, and realised/unrealised reporting).

Practically, accountants should document the client’s narrative and corroborate it with objective data (exchange exports, API feeds, wallet explorers, and bank flow evidence).

When does crypto trading look like a “business” under Australian tax law?

Crypto trading is more likely to be a business when the activities are conducted in a business-like manner with system and repetition, consistent with the indicators in TR 97/11.

The most persuasive “business of trading” indicators (when evidenced) typically include:

A clear profit-making purpose supported by documented plans and KPIs.
High frequency and turnover (e.g., daily/weekly trading rather than occasional rebalancing).
Systematic methods (rules-based entries/exits, stop-losses, portfolio allocation models).
Operational infrastructure (multiple exchanges, bots, APIs, portfolio management tools).
Risk management and governance (documented risk controls; separation of personal vs trading capital).
Commercial scale (sizeable capital deployed; consistent trading across the year).

It should be noted that even substantial profits do not automatically prove a business—what matters is whether the activity itself has the character of a business.

Can a one-off crypto trade be on revenue account if there was a profit plan?

Yes—an isolated crypto transaction can be on revenue account where it is entered into with a commercial purpose of profit and has the character of a business operation or commercial transaction, consistent with TR 92/3.

ATO practice (and case law principles reflected in TR 92/3) looks for:

A profit-making intention at the time of entering the transaction
A commercial transaction structure (not merely a passive investment)
A plan or undertaking directed at profit-making (e.g., arbitrage strategy, pre-arranged buy/sell sequence)

A client borrows funds, executes a structured arbitrage strategy across exchanges over a short period, and closes the position as planned. Even if it occurs only once, the commercial “undertaking” features may point to revenue account.

What are the practical tax consequences if crypto is on revenue account?

If crypto is on revenue account, the compliance and advisory impacts are material.

Key consequences to address in your workpapers:

Income tax treatment:
Loss utilisation:
CGT discount:
Evidence burden:

Disclaimer-worthy point for practitioners: Classification can be contentious and fact-sensitive, and mixed portfolios can exist (some assets held on capital account, others traded on revenue account). A file note and documented analysis is essential.

What records should an accountant insist on for crypto “revenue account” clients?

You should insist on complete, auditable records because the ATO expects taxpayers to be able to substantiate crypto transactions, wallet ownership, cost bases, and income characterisation.

Minimum evidence set (practice-ready):

Exchange data: CSV exports, trade confirmations, fee reports, funding/interest reports, staking/earn reports.
Wallet data: wallet addresses, custody records, on-chain transaction IDs (TXIDs), ownership evidence.
Bank flow proof: deposits/withdrawals, fiat on-ramps/off-ramps, matching to exchange statements.
Trading methodology: written strategy, logs, risk limits, screenshots of bot settings if used.
Accounting policy memo: your conclusion on revenue vs capital, referencing TR 97/11 and TR 92/3, and noting why the alternative view was not preferred.

What are common real-world scenarios where profit motive shifts crypto to revenue account?

Profit motive tends to “shift the needle” when it is paired with objective trading behaviour.

Common scenarios that frequently land on revenue account:

High-frequency spot trading: multiple trades per day/week, short holding periods, systematic entries/exits.
Derivatives and margin trading: commercial leverage, rolling positions, regular funding/interest recognition.
Arbitrage and market-making: structured profit-taking with tight spreads and rapid turnover.
Bot-driven strategies: automated execution with documented rules and continuous operation.
“Flip” behaviour on token launches: repeated participation in launches with a plan to sell quickly into liquidity events.

Scenarios more consistent with capital account (even with a general hope of profit):

Long-term holding with low turnover: occasional rebalancing; infrequent disposals; investment thesis documented.
Acquisition for use/utility: genuine use of tokens for network participation, not short-term resale (facts must support).

How should Australian accounting practices document the “profit motive” analysis?

You should document profit motive analysis as a structured position paper because disputes typically hinge on contemporaneous evidence, not hindsight.

A strong file includes:

Client interview memo: purpose at acquisition, intended holding period, use of strategies, time spent.
Trading statistics summary: number of trades, average holding period, turnover, largest drawdown, leverage usage.
System evidence: tools, bots, APIs, spreadsheets, reconciliations, monthly performance reporting.
Legal framework: application of
Conclusion and risk rating: why revenue account is preferred (or not), and what facts could change the conclusion.

How does accounting automation reduce risk in crypto revenue-account engagements?

Automation reduces risk by improving completeness, reconciliation integrity, and auditability—critical when arguing revenue account character and calculating taxable outcomes.

In practice, the biggest operational risks are:

Incomplete transaction capture across multiple exchanges/wallets
Fee misclassification and missing funding/interest amounts
Poor reconciliation between bank, exchange, and on-chain wallets
Unverifiable cost base calculations due to missing data

An AI-driven workflow is particularly valuable where volume is high and manual processing is error-prone.

Next Steps: How Fedix can help (and where MyLedger fits)

Fedix supports Australian accounting practices that need faster, more defensible reconciliations and workpapers for complex, high-volume transaction environments.

If your firm is dealing with crypto-heavy clients (or any high-transaction clients), MyLedger by Fedix can materially reduce manual effort:

Automated bank reconciliation: typically 10–15 minutes per client versus 3–4 hours (about 90% faster), enabling an 85% overall time reduction in processing.
Spreadsheet-like review workflow: faster exception handling and bulk categorisation.
Audit-ready structure: consistent reconciliations and workpaper discipline that supports your revenue vs capital position.
ATO integration and compliance workflow alignment: particularly useful when coordinating BAS/IAS/ITR obligations and substantiation.

Learn more at home.fedix.ai and consider building a standard “crypto revenue account” checklist and evidence pack inside your firm’s workflow.

Conclusion

Profit motive is a decisive practical indicator that crypto trades may be on revenue account, but Australian tax characterisation ultimately turns on objective evidence of business-like trading or a commercial profit-making undertaking. For accounting practices, the defensible approach is to document intention, quantify trading behaviour, apply TR 97/11 and TR 92/3 rigorously, and maintain complete records capable of reconciling bank, exchange and wallet activity. Where volume is high, automation (including platforms like MyLedger by Fedix) can reduce both time cost and technical risk.

Frequently Asked Questions

Q: Does having a profit motive automatically mean crypto gains are ordinary income in Australia?

No. Profit motive is important, but the ATO and the courts look at the whole factual matrix—especially repetition, system, scale and business-like conduct—before concluding gains are ordinary income under ITAA 1997 s 6-5.

Q: What ATO rulings are most relevant to “crypto on revenue account” analysis?

The most commonly applied ATO frameworks are TR 97/11 (business indicators) and TR 92/3 (isolated profit-making transactions), alongside ITAA 1997 s 6-5 (ordinary income) and the CGT provisions in Parts 3-1 and 3-3 where capital account applies.

Q: Can I have some crypto on capital account and other crypto on revenue account?

Yes. Mixed intention portfolios occur in practice. The classification should be supported by evidence, such as separate wallets/accounts, distinct strategies, and records showing which holdings are traded versus invested.

Q: If crypto is on revenue account, do CGT rules stop applying?

Not necessarily. However, where gains are properly characterised as ordinary income, CGT outcomes are typically not the primary taxing provision for those gains. Specific interactions can be complex and should be analysed carefully.

Q: What evidence is most persuasive to support a “trader” (revenue account) position?

Evidence of business-like conduct is most persuasive: high trade frequency, short holding periods, documented strategy, risk controls, systematic record-keeping, reconciliations, and consistent treatment over time.

Disclaimer: This content is general information for Australian tax and accounting professionals as of December 2025 and does not constitute legal or tax advice. Tax outcomes for cryptocurrency are highly fact-dependent and subject to change. Consideration should be given to the client’s full circumstances, and advice should be confirmed against current ATO guidance, legislation, and (where relevant) private rulings.