All Cryptocurrency posts

Re: Reporting loss on cryptocurrency from the past

TaxedoMask — Tue, 25 Feb 2020 23:59:26 GMT

Amend prior year returns. Claim capital loss. Just be mindful of the amendment time limits. (read: don't wait)

Reporting loss on cryptocurrency from the past

doskoi — Tue, 25 Feb 2020 20:19:27 GMT

Hi everyone,

I'm just a little confused about what I need to do. So I do understand the loss from the cryptocurrency (investment purpose) can be carried on to the next years to take down the capital gains. On Tax Year 2017, I've lost $2982.80 and on Tax Year 2018, I've lost $1752.03.

During that time, I didn't think that cryptocurrency was going to be taxed, and forgot about it ever since and did not report it to ATO till now.

I do my taxes myself, and I want to figure out whether I'm supposed to amend the previous years and include those losses, or wait till the 2019-2020 tax report time, and report it then. I am quite lost on what category I must add this to if I was to amend the past reports.

Expertise and insight from someone who knows a lot about this would be greatly appreciated!

Re: Proof of capital loss

ChrisR — Tue, 25 Feb 2020 05:54:20 GMT

Thanks for your post.

We recommend that you have a look at the tax treatment of cryptocurrencies page on our website. It explains what you need to know about transacting with cryptocurrency as well as what your record keeping requirements are.

There is no requirement for you to provide your records to us unless we ask for them. There are times when we ask for further information (e.g. audit) but we don't want you to unless we ask you to.

If you haven't kept records of your CGT assets, or your records have inadvertently been destroyed, it’s never too late to do something about it. Our website explains what your options are.

Hope this helps.

Thanks,

ChrisR

Re: Cryptocurrency capital loss offset capital gain from property sale

TaxedoMask — Mon, 24 Feb 2020 23:51:21 GMT

Yes. Just ensure you calculate your capital gains correctly.

Cryptocurrency capital loss offset capital gain from property sale

Lplau — Mon, 24 Feb 2020 09:46:41 GMT

Hi all

Can I use the captial loss from my cryptocurrency to offset the captial gain from the sale of my investment property?

Proof of capital loss

Mika — Sat, 22 Feb 2020 06:16:58 GMT

I have recently collated thousands of CGT events over many spreadsheets for my crypto trading. It will impossible for me to trace back though this to work out every individual event due to split orders, price fluctuations etc.

What I can prove as of this date is that I have a definate capital loss with my trading/ investments. Ie, my current portfolio is LESS than the money I've put into it.

Is there a way I can make a declaration of my holdings to the ATO as of this date (including my raw trading data), then either a) not make any more CGT events between now and EOFY or, b) provide accurate bookeeping for any further events.

Or are there any other options available?

Thankyou.

Re: Cryptocurrency gambling

aussiegirl — Fri, 21 Feb 2020 15:18:27 GMT

wrote:
Hi,

Given that the ATO has declared that cryptocurrencies are assets subject to CGT, but that gambling winnings are exempt from CGT, I am interested to clarify exactly how the ATO treats gambling with cryptocurrencies.

Scenario A:
Tom buys 10 ethereum for $15000. 2 months later he sells them for $20000. He has made a $5000 capital gain that is subject to tax.

Scenario B:
Tom buys 10 ethereum for $15000. 2 months later he gambles ALL 10 of them on an online cryptocurrency casino and makes a net win, coming away with winnings of 11 ethereum. He then sells his 11 ethereum winnings for 22000. The ATO lists "winnings or losses from gambling, a game or a competition with prizes" as being exempt from capital gains tax.

Is Tom still subject to any capital gains tax in Scenario B?

It all hardly works in real life!
There are a lot of nuances where smart people will not risk their savings in order to avoid taxes, because the risks are often much higher than a simple description in the situation!

Re: Crypto Trading & CGT

TaxedoMask — Fri, 21 Feb 2020 04:51:37 GMT

Probably have to make it yourself. Theres no specialised software unless you mean Excel haha.

Gambling winnings is non-assessable (windfall gain).

Havent seen the interplay between windfall gains and crypto. I'd venture a guess and say you take the MV of the btc on the date you get the crypto as the cost base. Disposal for another currency would trigger CGT. Depending on quantum and how you use it - I would consider arguing exempt under personal use (if you don't plan on cashing out - ie buying stuff with the coin directly.).

Re: Crypto Trading & CGT

Mika — Fri, 21 Feb 2020 04:23:36 GMT

Thankyou, that helped me understand a lot better.

Are you aware of any tracking software, or spreadsheets that apply specifically for Australian tax purposes?

Lastly,

I have also recieved Bitcoin from an online gambling website, which I have then traded into another coin of which I'm holding for long term investment. I'm assuming since it's a "winning" it is 100% taxable at the time of the trade?

Thankyou.

Re: Crypto Trading & CGT

TaxedoMask — Fri, 21 Feb 2020 03:25:53 GMT

As a general principle, disposal of a CGT asset triggers a CGT gains or loss calculation. Where you do not receive "cash", we look at the market value of the proceeds received. This is calculated against the cost base of the asset you are disposing of, not the market value.

If you are trading asset A for B, then Cost base of A + capital gain / loss of A = Cost base of B

Now lets look at your problem

Step 1 - Acquire 10 units of A:

Coin A 10 units $10 each = $100 cost base

Step 2 - Acquire 55 Unit of B (MV = $1 per unit) for 5 Units of A:

Coin A 5 units $10 each = $50 cost base

Coin B 55 Units $1 each = $55 cost base.

Capital Gain on disposal of 5 units of A = 55 (Proceeds) less 50 (Cost base) = $5

Step 3 - Trade 55 Coin B for 5 Coin A (Error)

If the MV of Coin B is $1.2, then you should get 55 x $1.2 = $66 worth of Coin A which at $10 each = 6.6 coin A. Yet you mention that you only get 5 Coin A worth $50 (@$10) - this does not make sense. Is Coin B really worth $1.20? You are using two different market values to determine the value of Coin B which is why there is an error in your calculation.

In the ATOs example, they mention that $6,000 is the proceeds.

You start with 100 Coin A worth $15,000

You exchange 20 Coin A for 100 Coin B worth $6,000 = proceeds of disposal

The disposal of Coin A: cost base = 20/100 x $15,000 = $3,000.

Capital Gain = proceeds less cost base = $6,000 - $3,000 = $3,000

You end up with:

80 Coin A with cost base of $12,000

100 Coin B with cost base of $6,000

and a Capital Gain of $3,000

You put in $15,000 end up with $18,000 worth of coins after the swap but have a $3,000 capital gain.

Crypto Trading & CGT

Mika — Fri, 21 Feb 2020 01:02:48 GMT

Hi, I'm trying to understand my at obligations for my crypto trading this year. In your example,

Example

On 5 July 2017, Katrina acquired 100 Coin A for $15,000. On 15 November 2017, through a reputable digital currency exchange, Katrina exchanged 20 of Coin A for 100 of Coin B.

Using the exchange rates on the reputable digital currency exchange at the time of the transaction, the market value of 100 Coin B was $6,000. For the purposes of working out Katrina's capital gain for her disposal of Coin A, her capital proceeds are $6,000.

Based on your definition, If I was to purchase 10 coin A @ $10each ($100 value),

Trade 5 of Coin A (Now $11) for 55 Coin B @ $1 = ($55 value)

Trade 55 Coin B (Now $1.2) for 5 Coin A (Now $10) = ($66 value)

I now have $116 woth of Coin A and $106 "capital proceeds" by your definition correct? When I've only gain the $10 in value.

Add another level, the proceeds surpass the orginial investment amount. Basically making it impossible to trade?

If the value of trading Coin A to B at any time is always of equal value at the time, why is this a taxable event if there is no realised gain on the investment, until it has been returned to AUD.

Thanks.

Re: Crypto and CGT

TaxedoMask — Wed, 19 Feb 2020 00:24:43 GMT

Trust someone buying crypto for their dad to include a tl;dr (love it)

Your $10,000 comes from the exemption for personal use assets. Not withstanding the fact you are treating this as an investment, where you are investing in crypto and cashing out - its caught under the concept around profits from isolated transactions (read: they are taxable) - see here.

For the crypto use to fall under the personal use asset exemption its more to do with using the crypto to facilitate a transaction eg. purchase of something online (concert tickets, games etc). there's a pretty good Community post on it too that shows where the line between investment and personal use is drawn.

Crypto and CGT

mindgames — Tue, 18 Feb 2020 08:09:22 GMT

Hello!

I recently re-opened a portfolio to start trading again, im very aware of how cgt and income tax works with profits of any inverstment the only thing i am ansure of is.

My father heard about my portfolio and asked if i could purchase on his behalf several different cryptocurrencys, i went ahead and did it not thinking of the possible problems i could have with CGT and tax.

So the question now is, we each put in sub ten thousand dollars who pays the CGT on closing out the investment in the future?

If the initial purchase was basicly split 2x ways there is an agreement in writing regarding profits made from the investment are we both under $10k CGT exemption?

TLDR- If an investment over 10kaud is split 2 ways (bringing it under 10kaud each) is it still tax exempt or do we pay CGT on profits?

thanks

Re: Tax for Bitcoin and crypto

TaxedoMask — Fri, 07 Feb 2020 05:06:42 GMT

Well if you include it, you are able to carry it forward to offset future capital gains (eg on sale of shares or other investments on capital account). The hassle is probably less than you think - you literally put the $ loss into a box each year until you utilise it.

If you want to treat as personal use asset which you scrap and thereby ignoring for tax purposes - that should be fine too. Though I wouldn't recommend it.

Re: Tax for Bitcoin and crypto

1cent — Fri, 07 Feb 2020 04:56:21 GMT

I dont get anything back from recording loss of it. So I want to avoid the hassle of including it into my tax. I have read if profit is not made then its not an obligation for the tax treatement. Correct me if I am wrong.

Regards

Re: Tax for Bitcoin and crypto

TaxedoMask — Fri, 07 Feb 2020 04:19:34 GMT

Crypto is not "currency" for tax purposes. Treated as capital asset. You record loss on disposal of the crypto.

The expenses are added to the cost base.

Tax for Bitcoin and crypto

1cent — Fri, 07 Feb 2020 01:40:07 GMT

Bought some Crypto coins majorly Bitcoin and few others worth roughly 10K

After few weeks they went down drastically so I sold then off and I am remained with 7.2K

Between these I bought a ledger drive wallet worth 180.00 to store them.

few Softwares subscription total worth 200.00 round.

Because I am in loss and do not have any future plan to buy then again, how will this effect my tax ?

Regards..

Re: Transfer costs: expense or CGT cost base component?

LiveHappily — Tue, 28 Jan 2020 03:50:57 GMT

Much obliged!

Re: Transfer costs: expense or CGT cost base component?

macfanboy — Tue, 28 Jan 2020 03:44:32 GMT

(10998.00 AUD proceeds) - (10000.00 AUD cost base) = (998.00 AUD capital gain)

Plus 50% discount if held for more than 12months.

Transfer costs: expense or CGT cost base component?

LiveHappily — Tue, 28 Jan 2020 03:53:11 GMT

Consider a simple bitcoin arbitrage trade:

I buy 1 BTC on AliceExchange for 10000 AUD

I transfer the whole balance to BobExchange, and the transfer costs 0.0001 BTC,
equivalent to 1.00 AUD (assuming the market price on AliceExchange has not
changed in the meantime)

I now sell the remaining balance of 0.9999 BTC on BobExchange at a price of
11000 AUD, receiving proceeds of 10998.90 AUD

(Assume for now that there are no commissions on the trades themselves.)

How should I account for the 1.00 AUD transfer fee?

Does this increase the unit cost base of the currency I sold,
keeping the total cost base the same i.e.

(10998.90 AUD proceeds) - (10000.00 AUD cost base) = (998.90 AUD capital gain)

Or do I expense the 1 AUD as an investing cost, reducing my total cost base but
keeping the per-unit cost base the same:

(10998.90 AUD proceeds) - (10000.AUD - 1.00 AUD = 9999.00 AUD cost base)
= (999.90 AUD capital gain)

(with 1.00 AUD submitted as an income tax deduction)

In general I believe the ATO does refer to "transfer costs" as being an
element of the CGT cost base so I presume the answer is the former, but I
would like to confirm this.

Thanks in advance for any advice.

Re: Temporary Resident (482)_Is Bitcoin CGT Applicable

GerardN — Tue, 28 Jan 2020 02:31:03 GMT

Hi BreeH,

Thanks for your feedback, which seems aligned to my understanding. I will apply for the private ruling as there are many more factors which make my case unique. Thanks.

GerardN

Re: Temporary Resident (482)_Is Bitcoin CGT Applicable

BreeH — Tue, 28 Jan 2020 01:41:46 GMT

You're right, there are special rules for non-residents when it comes to considering how CGT applies. For a resident taxpayer, any transaction affecting a CGT asset, including Bitcoin, would need to be considered in working out their taxable income for the year. A non-resident would only need to consider assets with a specific connection to Australia and, as you say, Bitcoin is not one of those assets. It might however, be relevant to determining your tax obligations in your home jurisdiction.

Holding Bitcoin with the view to making a profit may result in assesable income in Australia even if you're not using it in a business. The answer really depends on a whole lot of factors. You could consider asking for a private ruling on your specific circumstances. You can apply for a private ruling free of charge.

Re: Temporary Resident (482)_Is Bitcoin CGT Applicable

BreeH — Mon, 27 Jan 2020 22:29:16 GMT

Are you in Australia on a temporary resident visa? You may be eligible for tax concessions. We'll do some research and get back to you.

Temporary Resident (482)_Is Bitcoin CGT Applicable

GerardN — Mon, 20 Jan 2020 05:58:29 GMT

Hello,

The CGT as it relates to temporary residents is unclear to me - Could you please advise whether cryptocurrency (i.e. Bitcoin) is subject to the 15% CGT for temporary residents? The section on your website for temporary residents states that CGT only applies to real property in Australia, which in my opinion does not relate to Bitcoin. The Bitcoin is not for use in a business in Australia.

'....you're subject to capital gains tax (CGT) if a CGT event happens to a CGT asset that is taxable Australian property. For example, real property in Australia or a CGT asset you use in a business in Australia.'

Thanks,

Gerard

Re: Tax implications on lending Bitcoin

BreeH — Wed, 15 Jan 2020 23:28:59 GMT

Whether or not there is a taxing point on lending crypto will depend on your relationship with the exchange.

Crypto lending is likely to have the same tax issues as securities lending and there are rules in the tax law to prevent there being an immediate taxing point on the lending of a security. That is, without similar tax law to modify the outcome, the lending of crypto is a disposal of that crypto. It doesn't matter that you might get the same crypto back from the exchange; it is still a disposal and a re-acquisition of that crypto. Of course, it might be that the exchange never actually acquires the crypto but simply negotiates to sell it on your behalf. In that case, there is no disposal until the exchange matches you with a buyer.

So it all depends on how you deal with the exchange which is why we would suggest a private ruling. Although these queries are general in nature it's still a very complex topic. Taxpayers can write to us directly and can apply for a private ruling free of charge.

Re: BCH/BSV split, need ruling on which one is the '$0' distribution/airdrop chain.

metal — Wed, 15 Jan 2020 09:39:39 GMT

For anyone interested, I received a callback today in regards to this matter, after asking for a private ruling in regards to this split.

The information I received today is that prefork BCH coins will trigger a 'C2' Capital Gains Loss. i.e. What ever you bought them at, is what the capital loss will be.

Then both sets of coins from the fork will then be considered to have been acquired at $0 in equal amounts. With of course, any selling of either side of the fork's coins, being regarded as a capital gain against the acquire cost of $0.

This will become common advice from the ato going forward, in regards to this fork.

Thus it was indicated to me that I didn't have to go through with the private ruling if I didn't want to, as this advice will become part of the ato's overall common advice going forward.

I only have a small amount of crypto compared to some, so I really didn't need the private ruling. But I did need the advice to correctly fill out last years tax correctly.

So for some, odds are that you may need to apply for an amendment to last years tax return, if you already submitted it. Ask your tax accountant after the general advice is published on the ato website.

Cheers,
Ian

Re: BCH/BSV split, need ruling on which one is the '$0' distribution/airdrop chain.

metal — Wed, 15 Jan 2020 09:38:52 GMT

Re: Tax implications on lending Bitcoin

Roby — Wed, 15 Jan 2020 02:56:54 GMT

Hi Bree,

Thanks for stepping in.

My accountant says that I'm wasting my time seeking answers in this forum as replies by ATO staff here are not binding and could be wrong.

However, for the sake of anyone reading this thread, I'll just point out the following and let this matter go:

There is no ATO policy or guidance claiming that deposits and withdrawals to/from exchanges are considered sales/purchases. These are transfers, not tax events.
To the best of my knowledge, no Accountant, exchange or individual is considering these actions to be tax events.
Bitcoin is fungible. There is no difference if you got the same Bitcoin you deposited or not. They are all exactly the same.
Due to all the above, lending isn't a tax event either. Beneficial ownership is being maintained at all times. If the ATO feels that crypto lending and deposits/withdrawals from exchanges are tax events, it should issue a guidance saying so (and ruin the industry by doing so).
My queries were general in nature. I do not hold any special agreement with any exchange so referring me for private ruling (which my Accountant will charge handsomely for…) instead of providing answers on this forum defeats the purpose of this forum.

Re: ICO "free issue" for founders and advisers - CGT treatment

KylieS — Tue, 14 Jan 2020 22:45:10 GMT

Hi ,

Thanks for coming back to us. I would suggest contacting our early engagement area.

Thanks

KylieS

Re: ICO "free issue" for founders and advisers - CGT treatment

DDZ — Tue, 14 Jan 2020 03:35:57 GMT

Hi KylieS,

Is there any chance of getting an official ruling on this?

"Use their value at the time they were given to you to calculate your cost base". In this example, the coins were minted (and given to the founders and advisors) at $1 and are currently trading at around $1 so one could assume very little CGT would apply. I'm wondering if there is any other tax applied where the coins are transferred or transacted etc.? Please forgive my ignorance in these matters as I'm trying to learn how all of this crypto stuff works.

Many thanks,

David

Re: ICO "free issue" for founders and advisers - CGT treatment

DDZ — Wed, 18 Dec 2019 04:26:55 GMT

Thanks KylieS,

"Use their value at the time they were given to you to calculate your cost base". I beleive they were worth $1.00 when they were given and still worth around $1.00. I guess that means there would be close to zero CGT if they were transacted right now. If this is definately the case then my friend has nothing to worry about regarding CGT.

Much appreciated,

David

Re: ICO "free issue" for founders and advisers - CGT treatment

KylieS — Wed, 18 Dec 2019 01:47:10 GMT

Hi ,

Thanks for your patience.

The free issue or bonus coins are the same as if you purchased them. Use their value at the time they were given to you to calculate your cost base.

Check out the page on Record keeping crypto it explains what records you need. You would need to keep transaction records to prove ownership.

If you purchase/receive the crypto as an investment and keep it for 12 months you will get the50% CGT discount.

Have a read of the information regarding loss or theft of crypto. You don’t get the exact same coin back. So you need to work out the capital loss on the coin.

Thanks

Kylies

Re: ICO "free issue" for founders and advisers - CGT treatment

KylieS — Tue, 17 Dec 2019 06:16:11 GMT

Hi DDZ,

Great questions, let me look into it and I will get back to you.

Thanks

KylieS

Re: Tax implications on lending Bitcoin

BreeH — Wed, 11 Dec 2019 03:47:36 GMT

We appreciate that this is a very complex topic and the answer does depend upon how you deal with the exchange.

A private ruling will work through how that relationship works and what it means for the bitcoin that you own and what bitcoin you acquire back from the exchange if you change your mind. So, a private ruling can provide you with certainty.

Re: ICO "free issue" for founders and advisers - CGT treatment

DDZ — Tue, 10 Dec 2019 01:08:54 GMT

Please accept my apologies if it seems I'm asking dumb questions but I'm trying to learn more about crypto for my own personal education and also to prevent a friend from making costly mistakes.

Many thanks.

ICO "free issue" for founders and advisers - CGT treatment

DDZ — Mon, 09 Dec 2019 00:23:10 GMT

Since it appears that crypto is treated as an asset and therefore creates a CGT event when sold, does this same rule apply to "free issue" or bonus coins "given" to founders and advisers?

If so, does the 50% discount apply after one year of ownership?

How is the one year measured?

What documents would be required to satisfy the one year of ownership?

If the coin had to be "re-minted" during the escrow period due to a security breach, would the year of ownership start at the launch of the ICO or at the date of the re-minting?

Sorry for all the questions but I have a friend who is not sure how all of this works and he can't seem to get definitive advice. Some advice offered to him says that any gain from the sale of crypto is considered income rather than capital gains. He is confused by all the conflicting advice offered to him as am I. Thanks for any help with this.

Re: Tax implications on lending Bitcoin

Roby — Tue, 03 Dec 2019 00:49:29 GMT

Hi Kylie,

I am sorry to see that you avoid my simple question on how to calculate capital gains (complicated only by your claim that deposits = sale). Surely such a simple query doesn't require a private ruling?

Asked around and as far as I can tell not a single Australian exchange nor any user is considering a deposit to an exchange a "sale". So either everyone are wrong, or you are.

I am still waiting for you to reference a guidance or a policy which states that deposits/withdrawals to/from exchanges are tax events. Doubt such proof will be found.

But I will provide proof to my claim. Please find here a tax summary sample from KPMG (only a global big 4 accounting firm) which clearly shows that only purchases and sales are considered CGT events, not also withdrawal and deposits (they are being rightfully ignored for tax purposes).

So, is KPMG wrong? If so, perhaps the ATO should let them know they are wrong?!?

Could you please escalate this ticket to your supervisor or to a specalist?

Regards,

Roby

Re: Tax implications on lending Bitcoin

KylieS — Tue, 03 Dec 2019 00:29:03 GMT

Hi ,

The bitcoin you get back is different to the bitcoin you transferred. In that case, there has been a change in beneficial ownership of your original bitcoin.

You no longer own the original bitcoin. In the lending context, you have given your bitcoin to another entity in exchange for the promise that they will return a bitcoin to you in the future (but not the same bitcoin). This is a CGT event.

How you calculate your capital proceeds will depend on the nature of the agreement you enter into and the relationship you have with the other party.

If you need further information about a specific transaction we suggest you contact our early engagement area regarding a private ruling.

Thanks

KylieS

Re: Tax implications on lending Bitcoin

Roby — Thu, 28 Nov 2019 06:27:49 GMT

Thanks, Kylie.

I highly doubt the information provided is accurate but alright, I’ll play along.

Could you please tell me the tax implications on the following scenario?

- No other income in financial year
- Bought 10 BTC 8 years ago for $50 each.
- Sent this FY 10 BTC to an exchange, market price $9,000 at that time (you’re saying that at this point I sold them, right?)
- Held in the exchange 10 BTC (which for some reason I got into my account at the exchange, despite “selling” them by depositing them, but ok) for 2 months, then sold them for $14,000 each

According to what you’re saying, my taxable income would be 10*(9000-50)?

I guess we should simply ignore the fact that I later sold the bitcoins for higher price? Since that wasn’t my asset to sell, right?

That’s good news thank you!

Re: Tax implications on lending Bitcoin

KylieS — Thu, 28 Nov 2019 04:49:24 GMT

Hi ,

I am very sorry for the long delays and confusion in answering your questions.

The reason for the editing is because the information previously posted was not accurate.

The information on the thread is now correct.

If you aren't satisfied with the information you should contact our early engagement area so that they can confirm it for you.

Thanks and apologies again for the confusion.

KylieS

Re: Tax implications on lending Bitcoin

Roby — Thu, 28 Nov 2019 02:49:45 GMT

Hi Kylie,

I’m sorry, but there must be some huge misunderstanding here as that makes no sense.

You're saying: "sending it to the exchange means that you no longer own the original cryptocurrency."

A transfer to an exchange simply cannot be considered a sale. If it does, then when I do actually sell it on the exchange (for AUD), then what? I just sold something that I’ve already sold? How can I sell the same asset twice?!? And how am I supposed to calculate the tax on it? Surely that can’t be right…

I ran this by my Accountant and we strongly believe that this simply cannot be the case and that there must be a miscommunication here.

Could you please run this again by the specialist?

The reply you edited/deleted actually made a lot of sense and I am sorry it is no longer available.

In essence, logic dictates:

Depositing crypto to an exchange is not a CGT event as beneficial ownership is maintained (in other words, it’s a “transfer”, not a “sale”). This is in line with article 104-10. It is important to note that exchanges provide "custodial" services to Bitcoin deposits. Neither them nor the users consider such deposits/withdrawals as sales/purchases.
The same rules should apply when lending crypto (when the principal is to be repaid in the exact same currency, i.e. lending Bitcoin and receiving Bitcoin back) as beneficial ownership has been maintained.
Income tax should be paid on the interest payments.
CGT should be paid when the Bitcoin has been actually sold (for fiat or another cryptocurrency, known as **bleep**coins) and not earlier.

If the ATO view is indeed that a deposit of crypto to an exchange is a disposal, could you please answer the queries above (regarding selling the same asset twice - once by depositing it to an exchange and second time when actually selling it within the exchange) as well as provide a link to a formal guidance?

Thanks,

Roby

Re: Personal use asset

KylieS — Wed, 27 Nov 2019 23:51:09 GMT

Hi ,

The example that you have provided doesn't sound like it would fit the personal asset criteria. I would suggest contacting our early engagement area.

Thanks

KylieS

Re: Tax implications on lending Bitcoin

KylieS — Wed, 27 Nov 2019 04:08:08 GMT

Hi ,

Thanks for your patience.

To ensure that the information that we have provided is accurate and easy to understand I have edited our previous answers to your questions.

Thanks

KylieS

Re: Tax implications on lending Bitcoin

KylieS — Wed, 27 Nov 2019 02:30:57 GMT

Hi ,

I will follow it up and get back to you as soon as I can.

KylieS

Re: Tax implications on lending Bitcoin

Roby — Tue, 26 Nov 2019 05:33:45 GMT

Hi Kylie,

Any word from the specialist?

Have seen we started this thread learned about common practice of lending Bitcoin (either to special companies or within the exchange itself, so margin traders can use it) so I'm sure it happens a lot and surely isn't a tax event? (since the benefical ownership is maintained)

Thanks again and best regards,

Roby

Re: Cryptocurrency Loss

Deniyam — Fri, 29 Nov 2019 03:21:42 GMT

nice post and thanks for sharing this and get more details about online information

Re: Cryptocurrency Loss

Deniyam — Fri, 29 Nov 2019 03:21:30 GMT

The Reserve Bank of India (RBI) clamped down on cryptocurrencies. As part of its bi-monthly monetary policy statement, the central bank stated ,one of the advantages often cited by cryptocurrency users is that you can do whatever you want with your money, and no one can stop you.

The most widely traded cryptocurrency lost nearly 1% over the last 24 hours

Re: Cryptocurrency Loss

bankinfozone54 — Fri, 29 Nov 2019 03:20:42 GMT

I understand that each trade counts as a Capital gains/loss event, but as my overall net was a loss, do I even need to enter it in my tax

Re: Personal use asset

macfanboy — Sun, 24 Nov 2019 23:54:07 GMT

CGT event when they dispose of the Crypto not when they acquire it.

Cost base will be value when they acquired it not $0.

After 12 months 50% discount, unless they are seen to be in business.

Re: Personal use asset

DDZ — Sun, 24 Nov 2019 07:37:30 GMT

Thanks for your detailed explanation. I now have a better understanding of how it works. As one of the criteria being "the cryptocurrency cost $10,000 or less when acquired", what if the crypto was acquired for zero cost? This brings me to 2 more questions if I may:

I know somebody who has been offered a position on the board of an ICO and will receive some "free issue" crypto. It will be available to him after twelve months of escrow. Then he can spend it or cash it out to fiat or whatever.

1. Is there a CGT (or income) event at the time that the crypto is issued (free) to him or only when he spends/disposes of it?

2. Assuming there is a CGT event at the time he spends it, and the crypto has been held in escrow for twelve months, would the CGT be calculated on 100% or 50% of the value of the transaction? Thanks again for your help.

Re: Personal use asset

macfanboy — Sun, 24 Nov 2019 04:42:18 GMT

Doesn't quite work that way and if you did do that you would most certainly be audited.

The "$10,000" Personal use asset is a very rarely allowed as it is very difficult to prove that your intention was to NOT make a profit.

All of the following criteria must be met:

Your intention at the time of acquisition is for personal use (no profit-motive);
Whilst holding the cryptocurrency it remains your intention to use it for personal use (no profit-motive);
You dispose of the cryptocurrency for personal use; and
The cryptocurrency cost $10,000 or less when acquired.

It's very difficult to meet the criteria because you need to show you had basically no intention of holding the cryptocurrency as an investment.

The ATO have said their default position when considering circumstances where a person has held cryptocurrency for a number of years will be to treat any gain as a taxable capital gain not eligible for the personal use exemption. As a result, if you cannot demonstrate actual personal use with evidence, then it will be difficult to convince the ATO that your cryptocurrency gains are tax-free.

Personal use asset

DDZ — Sun, 24 Nov 2019 04:12:28 GMT

I notice discussions about using crypto for "personal use asset" purchases and a limit of $10,000 per transaction which would not be subject to CGT. My question is how many such transactions can occur in any tax year and still be treated as personal use and therefore not be subject to CGT? Taking this further, would it be feasible to purchase a house, sell $10,000 worth of crypto each month to pay down the mortgage and still not be subject to GCT?

Re: Cryptocurrency Loss

devin — Fri, 29 Nov 2019 03:20:26 GMT

Thanks For Giving Some Spceial Answer

Re: Cryptocurrency Loss

devin — Fri, 29 Nov 2019 03:20:10 GMT

I understand that each trade counts as a Capital gains/loss event, but as my overall net was a loss, do I even need to enter it in my tax?

Re: Going halves in a crypto mining hobby, classified as gift?

caged_broccoli — Tue, 19 Nov 2019 07:03:21 GMT

They've got a registered accountant for that.

As do I, actually. I hired the services of a registered accountant for my 2018/19 return, however I want to double check the figures they came up with were correct, and then prepare myself for the 2019/20 return without their help.

It may seem like overkill, but I want to understand the tax of crypto to see if it's worthwhile. I have to weigh the time it takes to calculate CGT the first around, versus the possible return on next year's return with how long it takes to calculate CGT a second time around.

At the moment, it's looking like I'm getting out of the crypto game, but I'm letting it play out a while longer, if you're familiar with the 'sunken cost fallacy'. If the second time around calculating CGT is easy, I may consider going into 2020/21, but probably not any longer with the advent of quantum computing rendering binary crypto worthless.

Quantum computing is a whole different ball-game, and stolen binary crypto will mean just about everyone will be filing a CGT loss for their emptied-without-permission crypto wallets (at the same time the AUD value will be <$0.01/10,000,000.00000000) - the ATO will be chasing up CGT loss statements on top of their losses, as if losing their entire investment wasn't enough.

We're talking about less than $100 taxable for last year's return, and sans another dramatic spike, similarly so for this year's.

Thanks for getting back to me on my questions. I just have to do the math, now. I'll let you know if I have further questions.

Re: Claiming electricity and cost of crypto miners as a hobby

macfanboy — Tue, 19 Nov 2019 07:02:09 GMT

I think that the word 'hobby' is misleading...

This is what I believe:

A hobby miner or forger is someone who participates in cryptocurrency mining/forging as an enjoyable pastime not in a business-like manner seeking commercial profits. Their investment in mining equipment will be relatively insignificant - a small scale operation typically at home - and intention to accumulate the rewarded coins rather than sell immediately to turn a profit.

If you’re a hobby miner or forger, then broadly speaking this is how you’re taxed:

Rewarded coins are not income but rather a capital acquisition
Cost of equipment is allocated as a cost of acquisition of the rewarded coins
Running costs are also allocated as a cost of acquisition of the rewarded coins
On disposal of the rewarded coins, gains are 100% taxable if within 12 months of being acquired, otherwise 50% taxable where held for more than 12 months.

Would love to be proven wrong.

Re: Going halves in a crypto mining hobby, classified as gift?

BreeH — Tue, 19 Nov 2019 06:38:49 GMT

Another great question

It sounds like you're asking how the other person might treat the crypto you sent them. If so, it would depend on how they are mining the crypto.

In your case for example, it is a hobby. It may be a hobby for them as well or they may be carrying on a business and so the consequences will depend on how they're operating. Perhaps they can join our Community?

Re: Average AUD value of cryptocurrency on a particular day

BreeH — Tue, 19 Nov 2019 06:25:24 GMT

The tax law requires you to keep records of every act, transaction, event or circumstance that can reasonably be expected to be relevant to working out whether you have made a capital gain or a capital loss from a CGT event (regardless of whether the CGT event has already happened or may happen in the future).

This means you need to record each transaction as it happens.

If you haven't recorded the time and value of the transactions you made and cannot access the records needed to establish the actual timing and value of the transactions, we can accept a reasonable attempt at reconstruction of your records.

What is reasonable will depend on your circumstances, but you should use the same method of estimating value for every transaction you need to reconstruct.

Re: Sale of crypto miners taxed as CGT?

BreeH — Tue, 19 Nov 2019 06:18:36 GMT

Because your mining activity is a hobby you can’t claim any deductions for the costs you incurred in undertaking the mining or for any losses you make when you sell the mining equipment.

Thanks again for raising some very interesting questions .

Re: Overlap between financial years

BreeH — Tue, 19 Nov 2019 06:13:20 GMT

You do not need to worry about indexation for your crypto assets - it doesn't apply to assets acquired after 21 September 1999. Please refer to Notes 2 and 17 on the CGT worksheet.

You're correct that you need to record the cost base of the crypto you acquire. The starting point for the cost base of your crypto is the money you paid or the market value of any property you gave (for example the market value of a token you exchanged in a crypto to crypto transaction) to acquire the crypto. There are other costs that may be included in your cost base, including things like selling costs.

You need to record the cost base of your crypto in Australian dollars, calculated as at the time the relevant expenditure was incurred.

For example, if you exchanged 1 token of crypto A for 1 token of crypto B on 2 May 2019 you need to establish the Australian dollar value of 1 token of crypto A on 2 May 2019 and that is the first element of the cost base for your token of crypto B.

The exchange of crypto A for crypto B results in a CGT event that happens in the 2019 income year. The Australian dollar value of 1 token of crypto B on 2 May 2019 is the capital proceeds for this CGT event.

If crypto B is held until 16 February 2021 e.g then there are no CGT consequences in relation to that asset until the 2021 income year.

Re: Claiming electricity and cost of crypto miners as a hobby

BreeH — Tue, 19 Nov 2019 06:04:04 GMT

You can’t claim any expenses you incurred in pursuing a hobby.

As a hobby miner, the mining rewards you receive are not assessable income when you receive them. The mining rewards (cryptocurrency) you generate through your hobby mining are CGT assets and you will have a CGT event when you dispose of (or otherwise deal with) your tokens.

The cost base of the cryptocurrency you generate as mining rewards will be zero. The cost of the miner and the electricity to run it are not included in any of the elements of the cost base of the cryptocurrency you generate through your hobby mining.

You do not have to exchange your cryptocurrency to AUD to have a CGT event. You will have a CGT event if you exchange it for another cryptocurrency, for any other type of good or service, for any fiat currency or if you transfer it to another entity for no consideration.

Any time a CGT event happens to an asset of yours, you need to calculate whether the event results in a capital gain or a capital loss. Each capital gain or capital loss you have during an income year is relevant to determining your net capital gain for an income year (which you pay tax on) or your net capital loss (which you can carry forward to offset capital gains in later income years).

Thanks again for your patience .

Re: Tally up each CGT event

BreeH — Tue, 19 Nov 2019 05:59:05 GMT

Thanks for your patience , you've rasied some interesting questions here. The same issues arise for anyone with a traditional share portfolio, or collections of valuable items - you need to keep track of the values just so you can make decisions about whether you want to buy more or sell some.

You need to work out whether you have a capital gain or a capital loss for every CGT event that happens to a CGT asset of yours during an income year (your cryptocurrencies are CGT assets).

Every time you exchange a cryptocurrency for another cryptocurrency, use it to buy another asset or a service, or give it to another entity, you will have a CGT event. You must keep records of every cryptocurrency transaction you have during the year so that you can calculate your gains and losses, and you must keep those records for 5 years. Keeping this information in a spreadsheet is very sensible as an asset register.

When no direct AUD value of a cryptocurrency is available, but the BTC value of the cryptocurrency is available, you can calculate the BTC value of the cryptocurrency and then convert the BTC value to an AUD value.

Our website contains information specific to record keeping for cryptocurrencies that may help.

Re: Overlap between financial years

caged_broccoli — Thu, 14 Nov 2019 07:55:21 GMT

i'm looking at CGT-gain-or-loss-worksheet-2019 and i don't know how to fill it out, i'm not even entirely sure where to start.

i'm looking to replicate it in an excel book to develop a separate formula spreadsheet according to imports from at least two different crypto exchanges so that several (hundreds if necessary?) worth of crypto-to-crypto exchanges, and crypto-to-aud exchanges, can be automatically calculated with the previously linked form as a template.

you'll have to speak in layman's terms because i'm new to the tax lingo, but i'm learning. depending on the level of sunken cost fallacy, and if my formulas-only excel book (no scripts) can be easily applied to next year's return, i may be ditching all crypto altogether so my tax returns are (much) easier in future.

so, in the worksheet, first we have the checkbox for "Other CGT assets and any other CGT events" (12) which i'm assuming is the only checkbox that needs to be checked in regards to crypto. so far, so good.

then, the "Description of CGT asset or CGT event" i can put either "crypto-to-crypto", "crypto-to-aud", or "aud-to-crypto" - is that correct? if not, what further description is required?

then, we have "Date of acquisition" and "Date of CGT event" - what's the difference?

if i bought 0.00005 worth of crypto 'A' on the 3rd of march 2019 ($50aud at the time in the previous financial year) and then sold half of it 0.000025 on the 8/8/2019 ($30aud at the time in the current financial year), does this mean i put the acquisition date as 3/3/2019?

then we have the "Cost base unindexed", "Reduced cost base" (16), and "Cost base indexed" columns. i have no clue what these mean. the explanations on the following page don't make sense to me.

of these cost base columns, there's "Amount", "Amounts to be deducted for cost base" (16), "Cost base (1 – 2)", "Amounts to be deducted for reduced cost base" (16), "Reduced cost base (1 – 4)", "Indexation factor" (17), and finally "Cost base indexed (3 6)" - in my example, where do the figures go? which boxes are calculated, from what amounts? are any of these irrelevant?

then we move on to the actual capital gain calculation itself. we have "Indexation method", "Discount method", and "Other method", each of these with their own three different boxes for calculated figures being "Capital proceeds" (18), "less: cost base indexed", and "Capital gain" (a and b, where b is the discount method). which of these boxes are filled out in my example?

then we finally move onto the final figures, the capital loss section, containing three boxes, "Reduced cost base", "less: capital proceeds" 18), and "Capital loss" (19). in my example, i made a capital gain. does this mean i put a negative amount? don't fill out these boxes at all? can you show me an example where i would fill out this section?

following on from this example, 0.00002 of the remaining 0.000025 of crypto 'A' is exchanged for 0.05 of crypto 'B' on the 13/8/2019. i look up the value of crypto 'A' and to be worth $10,000.00aud and crypto 'B' to be worth $100.00aud as the average aud price (low and high) on the date of 13/8/2019. then, on the 14/9/2019, i sell all of crypto 'B' (0.05) for $0.50aud. this is an exaggerated loss (but not in many people's cases).

is this following on example a separate worksheet? is it two additional separate worksheets? how do i fill out the form with these examples?

so, for each quoted ("") box that i've mentioned, what values do i put in each of these separate worksheets?

Re: Tax implications on lending Bitcoin

KylieS — Wed, 06 Nov 2019 04:45:51 GMT

Hi ,

Thanks for your patience. I am checking this out.

Will get back to you with more information.

Thanks

KylieS

Re: ATO App

kevin_t — Mon, 04 Nov 2019 23:04:15 GMT

AppValley is a mobile application that can be downloaded on any of the devices, be it an iPhone or
Android. It has applications that can be tweaked or modified for the user or any user preference. helps
the people find that the apps that are present on these particular platforms do not need the
other original version.

Re: Tax implications on lending Bitcoin

Roby — Fri, 01 Nov 2019 00:06:42 GMT

Hi Kylie,

Thank you for your detailed reply and for bringing in a specialist. I realise that cryptocurrency is still a new and developing industry and that the ATO’s view on how to treat related matters also develops and changes as the industry does.

The matter of retaining beneficial ownership makes a lot of sense and would explain why depositing Bitcoin to an exchange is not a CGT event even though the Bitcoin later withdrawn (with no transaction happening in between) is not the exact same Bitcoin (as evident when looking at the blockchain).

I explored the lending arena a bit more and found several companies which offer several services along the lines of: “send us your Bitcoin and we will pay you interest on it” (can provide names of such companies if needed). I know Australians are using these companies. Am certain the lenders declare the interest income as needed but do not consider the lending itself a CGT event as they retain the beneficial ownership (those companies do not enjoy the appreciation of the Bitcoin against the dollar as they still owe the same amount of Bitcoins to their customers, the lenders).

It seems to me that lending my Bitcoin to my friend is not a CGT event as I retain the beneficial ownership (similar to depositing it into an exchange or into an interest bearing account of corporate companies mentioned above. In fact, some exchanges are themselves offering interest bearing accounts!).

Considering all the above, could you please ask the specialist if she or he would be happy to amend the replies to my original questions in the original post?

Thanks again and best regards,

Roby

Re: Overlap between financial years

KylieS — Wed, 30 Oct 2019 05:21:13 GMT

Hi caged_broccoli,

We don't have any examples to provide. To try to assist further let me know which terms you need assistance with. We can provide some generic explanations to see if that can help you.

Thanks

KylieS

Re: Claiming electricity and cost of crypto miners as a hobby

KylieS — Mon, 28 Oct 2019 03:32:06 GMT

Hi ,

It is possible, but we are still waiting on information that we have requested from technical support. If you don't mind being patient with us for a little longer.

Thanks

KylieS

Re: Overlap between financial years

caged_broccoli — Sun, 27 Oct 2019 05:24:32 GMT

Thanks for responding, I appreciate it.

I understand that I still have to keep records of the acquisition of the crypto regardless of the acquisition being in a previous financial year, because that's how I determine the capital gain/loss.

My question is more to do with how I fill this out, with an example or two indicating how each field could be filled out

https://www.ato.gov.au/uploadedFiles/Content/IND/downloads/CGT-gain-or-loss-worksheet-2019.pdf

With examples, I will then be able to create an Excel book to automatically generate these worksheets.

Re: Overlap between financial years

macfanboy — Sun, 27 Oct 2019 05:11:30 GMT

Trying to answer you questions the best I can:

I understand that the exchanges of crypto are applied when they're within a particular financial year, but what about when I hold on to some crypto between financial years?

No Tax is paid because you haven't disposed of them yet.

I guess if it's only on the disposal of crypto, not the acquisition, then it only applies to the dates within the financial year of when the crypto was disposed of? Is that right?

Yes, that is correct.

Purchase between 1 July 2017 - 30 June 2018 ----> nothing done.

Dispose of or trade between 1 July 2018 - 30 June 2019 ---> Declare Capital Gain/Loss.

Re: Sale of crypto miners taxed as CGT?

caged_broccoli — Sun, 27 Oct 2019 05:08:47 GMT