Roughly one in three Australian adults now own cryptocurrency, and the ways Australians use digital assets are expanding beyond simply buying and holding. One such example is crypto prediction trading on platforms like Polymarket, where users can use crypto to trade on the outcome of real-world events. This creates a separate tax question for anyone earning money from these markets: are Polymarket winnings taxable in Australia?
The answer depends on how you trade, how often you trade and the nature of your activity. Simply using crypto on a prediction market does not automatically determine the tax treatment. Instead, the Australian Taxation Office (ATO) may look at the circumstances behind your trades. So, even if two people make the same winning Polymarket trade, their Australian tax outcomes can differ based on how they conduct their trading activity.
Key Takeaways
- Casual and occasional prediction market wins are generally outside the tax system.
- Frequent and systematic trading on these platforms can make the winnings taxable.
- Crypto you receive as a win has its own tax treatment, separate from the original win.
- Your trading pattern, organisation and repetition can matter more than the size of any single winning trade.
How Does The ATO Tax Polymarket And Crypto Prediction Trading In Australia?
Polymarket and similar platforms let users bet on the outcome of events, settled in crypto rather than cash. The ATO has not published a rule written specifically for prediction markets, so it applies its existing guidance on crypto asset prizes and gambling winnings to this activity instead. Under that guidance, placing a bet, winning, losing, and selling out early are not all treated the same way.
Tax On Placing A Bet
Depositing crypto into a Polymarket position is not itself a taxing point. No income arises, and no capital gains event happens simply because you have entered a market and are waiting for it to resolve. Tax only becomes relevant once that position actually concludes.
Tax On A Winning Position At Resolution
For most individual users, winnings from a genuine game of chance are not treated as assessable income, and any capital gain made directly from the win is disregarded. This outcome does not depend on how often you place a bet, or how much research goes into it, provided the activity still carries genuine unpredictability rather than resembling a structured trading operation.
Tax On A Losing Position At Resolution
Losses work the same way but in reverse. Where the winning side of a bet would have been disregarded, a losing position is not a deductible cost either, since it sits outside the tax system in exactly the same manner as a win would.
Tax On Selling A Position Before The Market Resolves
Selling a position on Polymarket’s secondary market before the underlying event is resolved is different from receiving a payout after a prediction is settled. In this case, you are exiting the position at the market price while the outcome is still uncertain. As a result, the transaction is more closely aligned with a crypto asset disposal than a settled prediction win.
If the position is treated as a crypto asset held as an investment, the sale can therefore trigger Capital Gains Tax (CGT). The taxable capital gain or loss would generally depend on the position’s cost base and the amount you receive when you sell it.
When Does This Become Business Income Instead?
The tax treatment can change when prediction market trading becomes a business rather than a personal activity. The key factor is not simply how much you win or lose, but how organised and systematic your trading is.
Indicators that your activity may have a business character include:
- Using dedicated tools or software to analyse and price event probabilities.
- Keeping detailed trading records similar to a formal trading ledger.
- Following consistent position-sizing and trading strategies.
- Trading regularly with a deliberate and ongoing intention to generate income.
When your activity has these characteristics, the profits may be treated as assessable business income, while qualifying losses may be deductible under the applicable rules.
How To Calculate Tax On Polymarket and Crypto Prediction Trading In Australia?
Even where a win itself is not taxed, the crypto you receive from it is not automatically tax-free forever. It still becomes an ordinary crypto asset the moment you hold it, and whatever you do with it next follows the usual crypto tax rules.
Step 1: Confirm Whether The Win Itself Is Taxed
Casual, personal trading on prediction markets generally means the win is disregarded entirely, with nothing to calculate at this stage. Where the activity is organised enough to be a business instead, the win is assessable income, calculated at its market value in Australian dollars at the time it was realised.
Step 2: Set The Cost Base Of The Crypto You Won
Regardless of which category applies, the crypto you receive from a winning trade, such as USDC, carries a cost base equal to its market value in Australian dollars at the moment you received it.
Cost Base = Market Value Of Crypto (in A$) At Time Of Winning Trade
Step 3: Calculate Any Later Capital Gain Or Loss
If you later convert that crypto, swap it, or spend it, this is a separate capital gains event, assessed independently of whatever happened with the win itself.
Capital Gain or Loss = Capital Proceeds At Disposal − Cost Base
Step 4: Apply The CGT Discount, If Eligible
Where the win itself was not assessable income, and the resulting crypto was held for at least 12 months before disposal, the standard CGT discount can reduce the eventual gain.
Discounted Gain = Capital Gain × 50% (individuals; only if held 12+ months from the date of the win)
Real-Life Scenario
A user on the ATO Community forum, mushi333, asked exactly the question this guide is built to answer. They had been trading on Polymarket and winning money on it, and wanted to know whether this counts as gambling, where winnings are not taxed, provided it is not their profession, or whether the crypto nature of the platform means it will always be counted as income or CGT.
Assumptions
To work through mushi333’s situation using the categories from earlier in this guide, we will use the following figures:
- Activity described: Occasional trading on Polymarket, alongside other work
- Trading pattern: No dedicated software, no structured record-keeping mentioned
- Total winnings over the period: 400 USDC, worth approximately A$600
- Formal structure: No ABN, no business registration, described as “dabbling”
Step 1: Apply The System-And-Organisation Test
The word “dabbling” is itself a strong signal here. There is no mention of dedicated pricing tools, structured record-keeping, or consistent position sizing, which are the actual factors that tip an activity into business territory. On these facts, the activity reads as a personal pastime rather than an organised trading operation.
Step 2: Confirm The Winnings Are Not Assessable Income
Based on that classification, the 400 USDC in winnings, worth approximately A$600, is not treated as assessable income, and no capital gain arises from the win itself. This answers the first half of the original question directly: it is not counted as income purely because it is not a profession, but because the activity lacks the organisation a business would require.
Step 3: Address The Crypto Nature Directly
The original question also raises whether the crypto element changes anything. It does not change the classification test itself, but it does mean the 400 USDC is not automatically clear of tax forever. From the moment it is won, it becomes an ordinary CGT asset, with its cost base set at its market value in Australian dollars at that time, roughly A$600.
Step 4: Confirm What Happens If It Is Later Sold Or Converted
Say the 400 USDC is converted to Australian dollars three months later, once the exchange rate has shifted slightly, receiving A$620 for it.
Capital Gain = A$620 (Capital Proceeds) − A$600 (Cost Base) = A$20
Since the USDC was held for only three months, well short of the 12-month threshold, no CGT discount applies, and the full A$20 is added to the capital gains for that year. This is the mechanism that answers the second half of the original question: the crypto nature does not make winnings automatically taxable as income, but it does mean a later conversion has its own, separate tax consequence, however small.
How To Report Tax On Polymarket and Crypto Prediction Trading In Australia?
What gets reported, and where, depends on which side of the business-versus-personal line your activity falls on, and separately, on what eventually happens to the crypto you won.
Where the win itself is not assessable, nothing needs to be reported for the win in the year it happened, and no form or schedule is required for it. The only future reporting obligation arises if and when the crypto you won is eventually disposed of, at which point it follows the capital gains procedure described below.
Reporting Winnings Treated As Business Income
Where the activity has genuinely become a business, the reporting method depends on how you operate:
- As an individual without an Australian Business Number (ABN), declare the net profit under “other income” in myTax, at Personalise return, with any deductible losses claimed against it in the same section.
- As a sole trader with an ABN, report it through the business income and expenses section instead, using the same figures your own trading records show.
- Lodging on paper, business income goes on the Business and professional items schedule attached to your return, not the Supplementary tax return’s capital gains item.
This sits entirely separately from any capital gains section, even if you also hold other crypto disposed of during the same year.
Reporting The Capital Gain Or Loss On Disposal
When the crypto you won is eventually sold, swapped, or spent, report it through the same capital gains procedure that applies to any other crypto disposal:
- At Personalise return, select the option covering income or losses from investments or property.
- At Prepare return, select Add or Edit on the Capital gains or losses banner.
- Enter your Total current year capital gains, then your Net capital gain, applying the CGT discount where the holding period allows it.
- If lodging on paper instead, this goes under item 18, Capital gains, on the Supplementary tax return.
- Complete the capital gains tax schedule if your total gains or losses for the year exceed A$10,000.
How Can KoinX Help With Polymarket And Crypto Prediction Market Tax in Australia?
Working out whether an individual trading pattern crosses into business territory is not something a transaction export can answer on its own, but keeping the underlying figures organised is exactly where KoinX helps. It connects with 800+ wallets, exchanges and blockchains, pulling every deposit, win, and disposal into one place.
Complete Tax Report
The Complete Tax Report applies ATO rules directly to your transaction data, covering CGT, income, and portfolio balances in one place, giving you a clear record regardless of which side of the business line your activity falls on.
Buy Sell Report
The Buy Sell Report lists every buy, sell, and swap you have made, so you can check each Polymarket position, and any early exit through the secondary market, line by line before generating a final tax report. This is a useful cross-check against your own trading history, particularly for confirming which positions were genuine wins or losses at resolution, and which were sold early as an ordinary crypto disposal instead.
Before committing to a paid report, free crypto tax calculator for Australia gives a quick estimate of your capital gains position on any prediction market winnings you have already disposed of.
If you trade on Polymarket or similar platforms, connecting your wallets to the software keeps every win and its eventual disposal tied together correctly. Get started with KoinX, and turn scattered prediction market activity into one accurate, organised tax record.
Winning on Polymarket is not automatically taxable, but it is not necessarily tax-free either. Casual, occasional trading is generally treated as genuine wagering, so winnings are disregarded and losses are non-deductible. This changes when activity becomes organised and consistent enough to resemble a trading operation, making winnings assessable and losses potentially deductible. Selling a position before resolution is treated separately as an ordinary capital gain or loss.
Since the crypto you win keeps its own tax life regardless of that classification, tracking its value at the moment you win matters either way. Connecting your wallets to KoinX keeps that figure recorded automatically, so whichever category your trading falls into, your position stays accurate and ready for tax time.
Frequently Asked Questions
Do I Pay Tax If I Win Money Trading On Polymarket Occasionally?
Generally, no. Casual, personal trading on prediction markets is treated the same way as any other genuine wager, meaning winnings are not assessable income and are not subject to capital gains tax at the point you win. This applies regardless of how much you win on any single trade, provided the activity remains personal rather than organised like a business.
Can Frequent Polymarket Trading Ever Become Taxable?
Yes. If your trading becomes organised and systematic, with dedicated tools, structured record-keeping, and a genuine intention to generate ongoing income, it can be treated as a business activity instead. In that case, winnings are assessable income, and losses may become deductible, rather than both being disregarded entirely.
Is The Crypto I Win On Polymarket Taxed Even If The Win Itself Is Not?
Yes, potentially, later on. Even where a win is not taxed, the crypto you receive still becomes an ordinary CGT asset from that point forward. If you later sell, swap, or spend it, that disposal is assessed separately under the usual crypto capital gains rules, using its value at the time you won it as the cost base.
Does It Matter Which Platform Or Prediction Market I Use?
Not directly. The tax treatment depends on the nature and pattern of your own trading activity, not on the specific platform. The same personal-versus-business distinction applies whether you are using Polymarket or a similar crypto prediction market, since the ATO looks at how you conduct the activity rather than which product facilitates it.
Do I Need To Keep Records If My Polymarket Winnings Are Not Taxed?
Yes, it is still worth doing. Even where a win itself creates no tax obligation, you will need the crypto’s value at the time you won it if you ever dispose of that crypto later. Keeping this record at the time of the win avoids having to reconstruct it after the fact, when it may be harder to verify.
