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_CoinSwap(Newbie)Newbie
30 Mar 2021

Hi everyone,

How should i pay tax in the following scenario?

Scenario#1:

1. I am PR in Australia and have a bank account in Singapore and I buy 100'000 USDT for 136'600 SGD and send it to my friend's wallet in Korea.

2. My friend in Korea sells 100'000 USDT for 120M KRW.

3. He uses the KRW to buy goods in Korea and sends it to Singapore for selling and get SGD sent to my bank account.

=> Is it legal for sending money like this? If yes, how is tax calculated for me in this case?

Scenario#2:

1. I am PR in Australia and have a bank account in Singapore.

2. My friend is in Australia and has a Australia-Singapore online business. She uses bank transfer to send me 100'000 AUD.

3. I sends her 103'000 SGD to her bank account in Singapore.

4. I use 100'000 AUD to buy USDT and sell them to get 114'000 SGD in my bank account in Singapore.

=> Is it legal for sending money like this? If yes, how is tax calculated for me in this case?

Many thanks,

CoinSwap

5,272 views
3 replies
5,272 views
3 replies

Most helpful response

Most helpful reply

BlakeATO(Community Support)Community Support
30 Mar 2021

Hi @CoinSwap,


It depends on a couple of things for each scenario.


If you're an Australian resident, you're liable for tax on your worldwide income. If you are the legal owner of the cryptocurrency at any point, and not running a business for this venture, you'll be liable for capital gains on the disposal of it. This is the case whether it stops being legally yours when you send it to your friend's wallet, or when your friend disposes of it. If you're a foreign resident, you're only liable for capital gains on taxable Australian property, so not capital gains implications.


If you earn income from the transaction in FIAT currency (not just the amount you loaned), you'll need to report it. It's likely you'll be conducting a business if this is the case. You'll use forex rules in determining your gains. This is the same whether you're an Australian resident for tax purposes or a foreign resident.


We, the tax office, can only confirm what is legal in the tax-world. However, even if your income is earned illegally, you'll still be liable for tax on that income. You cannot claim deductions related to earning that income from an indictable offence, though.


For further reading:

Work out your tax residency

Tax treatment of cryptocurrencies

Shareholding as investor or share trading as business?

Forex gains and losses

Income from illegal activities: losses and outgoings

All replies

Most helpful reply

BlakeATO(Community Support)Community Support
30 Mar 2021

Hi @CoinSwap,


It depends on a couple of things for each scenario.


If you're an Australian resident, you're liable for tax on your worldwide income. If you are the legal owner of the cryptocurrency at any point, and not running a business for this venture, you'll be liable for capital gains on the disposal of it. This is the case whether it stops being legally yours when you send it to your friend's wallet, or when your friend disposes of it. If you're a foreign resident, you're only liable for capital gains on taxable Australian property, so not capital gains implications.


If you earn income from the transaction in FIAT currency (not just the amount you loaned), you'll need to report it. It's likely you'll be conducting a business if this is the case. You'll use forex rules in determining your gains. This is the same whether you're an Australian resident for tax purposes or a foreign resident.


We, the tax office, can only confirm what is legal in the tax-world. However, even if your income is earned illegally, you'll still be liable for tax on that income. You cannot claim deductions related to earning that income from an indictable offence, though.


For further reading:

Work out your tax residency

Tax treatment of cryptocurrencies

Shareholding as investor or share trading as business?

Forex gains and losses

Income from illegal activities: losses and outgoings

_CoinSwap(Newbie)Newbie
31 Mar 2021

Thanks Blake for you answer,

May i confirm that in general I will need to calculate the profit/loss at the time i dispose the USDT which is likely to be 0 because USDT is a stable coin.

And then any income i make from doing this arbitrage need to be reported in the tax return.

Does ATO have any tool to help calculating the profit/loss for every dispose event of the Crypto?

BlakeATO(Community Support)Community Support
11 Apr 2021

Hi @CoinSwap

Yes. When a CGT event occurs, you must account for it at that time, no matter if it's an Australian transaction or international. This is covered under our translation (conversion) rules.

If you are an Australian resident, you'll need to report your international cryptocurrency trades. Australian residents are taxed on their worldwide income. If you're not an Australian resident for tax purposes, you won't report your international cryptocurrency trades. Foreign residents are only taxed on their Australian income.

This applies whether you make or lose money on the transaction, or break even. Take a look at working out your capital gain or loss for more on this.

We don't have a tool to help calculate your capital gain events, as there are many facets of your cost base of each capital asset. You can read about elements of the cost base to help keep track of each part, though. Alternatively, a registered tax agent can help.

You can read about translation (conversion) rules, working out your capital gain or loss and elements of the cost base on our website.

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