Crypto convert and send to other exchange - tax implications

 Author: AriATO(Community Support)Community Support

ATO Certified Response4 Nov 2022

Hi @Anonymouses123

If Matt is not carrying on a business of dealing with crypto assets then Matt will be subject to CGT rules. See Crypto-asset-investments

The conversion of AUD to XRP ( purchase of a crypto) is not a taxable CGT event.  

The transfer of Matt’s XRP to another exchange is not a taxable CGT event unless there is a change in legal or beneficial interest in the XRP. If Matt’s cryptocurrency holding reduces during this transfer to cover the network fee, the transaction fee is a disposal and has capital gain consequences. If Matt’s transaction fee cost $X when Matt purchased it and the market value of the transaction fee is Y, the tax consequences is Y-X

When Matt exchanged the XRP to USDT, Matt disposed of one CGT asset and acquire another. Therefore, a CGT event happens to Matt’s original crypto asset. Because Matt received property instead of money, Matt needs to work out the market value of the crypto asset in Australian dollars. For more information go to Crypto to crypto exchange or swap (QC 69949)

However, if Matt is carrying on a business of trading in crypto assets then assets used in that business will be trading stock and the CGT rules will not apply: see Crypto assets used in business on our website.