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Forte198(Newbie)Newbie
25 Apr 2022

Hi,

I was involved with a trading platform using A cryptocurrency against B cryptocurrency, their assigned analyst did his professional job well, and I gained a substantial profit within a short period of time, the analyst in turn received his commissions at the end of each profit trade.

When I was about to withdraw a portion of my initial profit, their account dept informed me that

- I will have to pay off my CGT to them first, before releasing my withdrawal request.

Is this illegal?

1) I am not sure will they pay on my behalf, my CGT to ATO.

As the account dept mentioned, they don't need my TFN, as long as they have my driving license via KYC, ATO can automatically link them up, during their submission to ATO.

2) They could easily offset the CGT from my withdrawal request figure promptly, but they refused my suggestion.

Instead, they insisted I will have to pay CGT first to their account dept, before releasing the withdrawal request.

Is there such a practice, or is it illegal for them to do that?

Please advise.

Thank you.



2,351 views
4 replies
2,351 views
4 replies

Most helpful response

Most helpful reply

Bruce4Tax(Taxicorn)Taxicorn
26 Apr 2022

Sounds like a scam to me.


CGT goes on your tax return, not theirs - unless their structure is a trust.


All replies

BlakeATO(Community Support)Community Support
27 Apr 2022

Hi @Forte198


You won't be paying CGT to the platform first. It may be a platform fee of some kind, but it isn't capital gains tax in Australia. It may be for another country (usually where the platform is based), though. If that's the case, they'll pay it to that country's tax authority.


KYC (know your customer) is handled by AUSTRAC, so this may be the platform's process for knowing who they can issue the refund/FIAT to according to AUSTRAC bank transfer rules. That isn't to do with CGT or taxes, though.


It definitely isn't Australian CGT you'll be paying to them. It sounds more like a platform fee, or as @Bruce4Tax suggested, a scam. Either way, it isn't playing fair. You can let us know about it formally by making a tip-off, but I'd suggest talking with them to clarify exactly which country's CGT it is, if it's CGT at all.


If it ends up being a platform fee (even if it's disguised as something else), you can claim it as a cost of selling the asset (second element of the cost base).

Liked by Forte198
danco(I'm new)I'm new
7 Sept 2023

I'm in a similar situation and wondering how you went @Forte198 ? I'm unsure whether I'm being scammed or this "tax" charge is legit

CatherineATO(Community Support)Community Support
7 Sept 2023

Hey @danco!


CGT is only payable to the ATO. We don't have 3rd parties hold it or recover it for us in this instance. TFN is always required on any submission from a 3rd party. CGT is only declared and reviewed via the income tax return.


We haven't had any further info from the original post, so we can only advise that it isn't part of our procedure or process with collecting CGT from tax payers and you err on the side of caution!

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Paying directly to trading platform CGT before withdrawing my profit gain. Is this illegal? | ATO Community