If free tokens have landed in your crypto wallet, the ATO has put forward a new view on how they should be taxed. Draft Taxation Ruling TR 2026/D1, released on 19 August 2026, proposes that most everyday investors would not pay tax when an airdrop arrives, but only when they later dispose of the tokens. Traders and people paid in tokens face a different result. Comments on the draft close on 16 October 2026, according to the ATO's legal database, so the window to have a say is still open, but only just.

The draft is not final. But it is proposed to apply both before and after it is issued, which means it could affect airdrops received in past years as well as future ones.

An airdrop is a distribution of crypto tokens to wallet holders, often free, to promote a project, reward early users or distribute a new token.

The ATO's general web guidance has long treated an airdrop of an established token as ordinary income, valued at market value when received. The draft ruling takes a more detailed approach, focusing on the circumstances of the person receiving the tokens.

For casual holders, that could mean a meaningful change in when tax is paid, and how much.

The draft view for everyday investors

Under TR 2026/D1, an airdrop received by a non-business taxpayer as an unsolicited receipt, gift or windfall is generally not ordinary income. It sits on capital account.

The airdropped token is treated as a separate CGT asset. Its cost base is generally its market value at the time it is received. Where a newly minted token has no or negligible market value on receipt, the cost base will generally be nil.

Tax then arises when the token is disposed of, for example sold, swapped for another crypto asset or used to buy something. That is CGT event A1.

The draft also says a person who receives an airdropped token as a result of a hobby or entertainment activity does not need to include its market value in assessable income.

When an airdrop is taxed on arrival

The draft identifies two main situations where the market value of an airdrop is ordinary income when received.

The first is a person carrying on a business of trading crypto assets. They include the market value of any airdropped tokens in assessable income, even if the receipt is a gift or windfall.

The second is a person who receives tokens in return for services, such as promoting a project. The value of those tokens is treated as if it had been paid in cash.

Whether someone is carrying on a trading business depends on the facts, including the scale, regularity and organisation of their activity.

A worked example

This is a hypothetical illustration only, assuming the draft is finalised in its current form.

Mia, a retail investor, receives 2,000 tokens of an established project in March 2026, worth $0.50 each, a total of $1,000. She sells them in May 2027, 14 months later, for $1,600.

Under the draft view, nothing is taxable in March 2026. Her cost base is $1,000, so she makes a $600 capital gain on sale. Because she held the tokens for more than 12 months and sold before 1 July 2027, the 50 per cent CGT discount generally applies, leaving a $300 net capital gain, assuming no capital losses.

Under an ordinary income approach, the full $1,000 would have been taxed in 2025–26, with a further $600 capital gain on sale, reduced to $300 after the discount. In this example, the draft view both defers tax and reduces the amount taxed.

If Mia were a crypto trader, the $1,000 would generally be ordinary income on receipt under the draft.

Issuers, back years and initial allocations

The draft also covers projects that issue airdrops. By default, the issuer is treated as having a CGT event A1 when it distributes tokens, based on market value. Where the tokens are trading stock of a business, the capital gain or loss is disregarded and the trading stock rules apply instead. Separate costs such as distribution or platform fees may be deductible.

On timing, the ATO proposes the final ruling apply before and after its issue date. The exception is initial allocation airdrops, the first distribution of a new token before any trading, where the ruling would only apply to airdrops after the final ruling is issued.

Anyone who has already declared airdrops as income in earlier returns may wish to seek advice once the ruling is final.

Record-keeping becomes more important under a capital account approach. Holders will generally need to know when each airdrop arrived, its market value at that time and what happened to the tokens later, because those details drive the cost base and any eventual gain.

The bigger crypto compliance picture

The ATO is watching crypto closely. Its data-matching program collects details on about 700,000 to 1.2 million individuals and entities each financial year from crypto exchanges, covering 2014–15 to 2025–26.

A separate draft, TD 2026/D2, also released on 19 August, proposes that wrapping and unwrapping crypto each trigger CGT event C2. Comments on that draft closed in September.

From 1 July 2027, crypto gains will also move to the new CGT regime. The 50 per cent discount is replaced by cost-base indexation and a 30 per cent minimum tax on capital gains for resident individuals, applying only to gains that accrue after that date.

The ATO has also warned about fake emails demanding "cryptocurrency disclosure declarations", which it says are scams.

Key dates to watch

The ATO's legal database lists 16 October 2026 as the due date for comments on the draft.

The ATO has not said when the final ruling will issue. Until then, TR 2026/D1 is a draft and is not binding.

Individuals lodging their own 2025–26 returns generally have until 31 October 2026. A registered tax agent can help assess how the draft may apply to individual circumstances.