Liquid staking and restaking under ATO rules: the gray area nobody's resolved

Ordinary staking has a clear answer in Australia. Deposit into a proof-of-stake network, earn rewards, and those rewards are ordinary income at their AUD value when you receive them. That value becomes the cost base, and you work out a capital gain or loss when you later sell. The ATO says so plainly.

Liquid staking is where the clarity stops. When you send ETH to a protocol like Lido and receive stETH, or restake through something like EigenLayer for a token like eETH, you're doing something the ATO's published guidance doesn't directly address. Billions of dollars sit in these products, and the honest position is that the tax treatment is not settled. This piece is about drawing the line between what the ATO has actually said and what it hasn't.

What is settled

Two ATO principles do the heavy lifting here, and both are firmly established.

First, staking rewards are income. Tokens you receive as a reward are ordinary assessable income at market value on receipt, for investors and traders alike. That much is not in dispute.

Second, a CGT event happens on any disposal, and a disposal happens whenever beneficial ownership changes, including a crypto-to-crypto swap. The ATO has applied this to liquidity pools: depositing crypto into a pool is a CGT event, with your capital proceeds equal to the market value of what you receive back. The same logic reaches many DeFi arrangements where your coins are pooled and your specific tokens are no longer yours to reclaim.

Hold those two together and you can see the shape of the problem.

Where the gray area begins

The unresolved question is whether depositing ETH to receive a liquid staking token is itself a disposal.

If receiving stETH or eETH is a change of beneficial ownership, and you've swapped one asset (ETH) for a different asset (the liquid staking token), the ATO's general principles point toward a CGT event on the ETH, with the new token acquired at market value. That's the reading most consistent with how the ATO treats liquidity pools and token swaps.

But it isn't confirmed, and the designs differ in ways that matter:

• Rebasing tokens like stETH change your balance as rewards accrue. Are those balance increases ordinary income as they land, or part of a single capital position you settle on exit?
• Value-accruing tokens like eETH or rETH keep a fixed balance while the token's value rises. That looks more like a capital story, but the reward is still economically yours as it builds.
• The deposit and the exit each raise their own disposal question, and the answer to one doesn't automatically settle the other.

The ATO has not issued a ruling that names liquid staking, restaking, stETH, eETH, or EigenLayer. Its public staking guidance covers ordinary proof-of-stake rewards and stops there. When asked to clarify, the ATO has not given product-specific answers. So anyone telling you the treatment is definite is going past what the regulator has said.

Wrapped tokens show how the ATO is thinking

There's a useful signal in a related area. In 2026 the ATO issued a draft determination, TD 2026/D2, on the CGT consequences of wrapping crypto (for example, ETH into WETH). Its view: wrapping triggers a CGT event, the wrapped token is a separate asset from the original, and your capital proceeds equal the market value of the wrapped token you receive. It also holds that the wrapping itself isn't ordinary income, because you're interacting with an autonomous smart contract rather than a counterparty.

That tells you the direction of ATO thinking: swapping into a derivative token tends to be treated as a disposal. But two cautions. TD 2026/D2 is a draft, not final law. And it expressly does not apply to all forms of wrapping, only the specific one-to-one mint-and-return arrangement it describes. It does not settle liquid staking, and it would be a mistake to cite it as if it did.

How to handle the uncertainty

You don't get to wait for the ATO to catch up. If you're staking liquid, here's the defensible way through:

• Record everything: the ETH you deposit and its AUD value, the liquid staking token you receive and its value, every rebase or balance change, and the exit. You can't take a position later without the data.
• Pick a treatment you can justify, and apply it consistently rather than switching to whatever produces the lowest number each year.
• For a large or unusual position, consider asking the ATO for a private ruling. It's the one way to get certainty that binds the ATO to your specific facts.
• Get advice from an Australian crypto tax specialist before you file. This is genuinely unsettled, and the right answer depends on the exact protocol and your circumstances.

Whatever position you take, the record-keeping is the non-negotiable part. Kryptos tracks liquid staking positions across protocols, captures the AUD value at each step, and keeps the history you'll need whether the eventual answer is capital, income, or a mix. For the settled rules on staking, disposals, and DeFi in Australia, our Australia crypto tax guide is the reference, and the Australian crypto tax calculator can help you model a position.

About the author

Deepak Pareek

Head of Tax & Accounting - Kryptos