Crypto Taxes: Are ETH gas fees taxable? πŸ€”

miker5659
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Hey guys, one of the customer support managers at cryptotaxcalculator.io here πŸ‘‹. We get queries on this subject all the time so I thought I'd clear the air.

When you dispose of cryptocurrency to pay for a fee, you may trigger a capital gain tax (CGT) event on the disposal value of the fee itself (depending on your tax jurisdiction of course). As a result, this capital gain/loss is realised on the difference between the acquisition and disposal price of the cryptocurrency before "paying" for the fee.

As an example:

  1. You purchase 1 ETH to use for fees at the price of $1000.
  2. Some time later, you decide to mint an NFT.
  3. The gas fees for this mint are paid for in ETH and you pay a gas fee of 0.1 ETH. At the time of the sale, the price of ETH is now $2000.
  4. As a result, you've actually made a gain on the ETH itself (which was used as a gas fee).

The reason why is because the acquisition value of the 0.1 ETH was $100 (0.1*$1000) and the disposal value of the 0.1 ETH is $200 (0.1*$2000). Therefore, this will trigger a capital gains event of $200 - $100 = $100 for the sale of the ETH which was used for gas.

While this may seem obvious to some, you'd be surprised how many people forget to account for this in their capital gains calculations.

Hope that clarifies things and feel free to read more on this here: https://help.cryptotaxcalculator.io/en/articles/5629791-why-is-there-a-gain-on-my-fee.