CGT 50% discount - cryptocurrency

 Author: RachATO(Community Support)Community Support

ATO Certified Response10 May 2021

Hi @Toothfairylol,

The 50% Capital Gains Tax (CGT) discount applies to assets that are held for more than 12 months. Your example above indicates that two separate purchases of have occurred, acquiring the assets at different times to each other. So only the first 100 Etherum would be entitled to the 50% CGT discount at February 2022.

Cryptocurrency are considered capital assets, and a CGT event arises when you dispose of them. Disposal can occur in several ways, including when you: • sell or gift cryptocurrency • trade or exchange cryptocurrency (including the disposal of one cryptocurrency for another cryptocurrency) • convert cryptocurrency to fiat currency like Australian dollars, or • use cryptocurrency to obtain goods or services.

To make it easier to determine if you've made a capital gain or capital loss, you'll need to keep information about your crypto at the time you acquired them and disposed of them.

However, CGT doesn't apply to disposal of 'personal use assets'. A personal use asset is an asset that you keep for a short period of time and then dispose of to purchase items for your personal use or enjoyment (for example, coffee, concert tickets, or other items). More information regarding personal use assets and their criteria are found on our webpage 'Transacting with cryptocurrency'.

Importantly, only capital gains from personal use assets obtained for less than $10,000 would be disregarded for CGT purposes, and you need to demonstrate that the crypto was used for personal use.

I've found a few links that might help you in your introduction to the world of crypto, including pages on our website, as well as some other forum posts by other Community members. They're all full of good insight and might answer some questions that might come to play during your crypto transactions :)

ATO website- Tax treatment of cryptocurrency

ATO website- Transacting with cryptocurrency

ATO website- Record keeping for cryptocurrency

Community Post- Confused about tax on cryptocurrency

Community Knowledge Base- How do I calculate capital gains tax on cryptocurrencies?

Community Post-Cryptocurrency (good explanation of how to calculate Capital gain/loss)

RachATO