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harshanafdo(Newbie)Newbie
9 Sept 2024

Hello,


I'm a recent migrant to Australia and need clarification on the tax implications of a complex currency exchange situation. Due to currency exchange restrictions in my home country (due to low forex reserves), using traditional methods or money transfer services to exchange my personal savings to AUD is not possible.


To bring my savings to Australia, I'm forced to use cryptocurrency:

  1. I purchase USDT via peer-to-peer trading platform which is widely used in my home country.
  2. I transfer the USDT to an Australian crypto exchange account via ERC20, paying a network fee.
  3. Then I exchange the USDT to AUD and withdraw it to my Australian bank account, incurring withdrawal fees and GST on those fees.

* I do all these at the same time, so the exchange rates don't change resulting in no capital gain.


My questions are:

  1. Is this considered a CGT event? While transferring personal savings to Australia isn't usually taxable, the involvement of cryptocurrency makes this unclear.
  2. How do I calculate CGT in this scenario? Factoring in exchange rates, network fees, platform fees, and GST, my final AUD amount is always lower than the initial USDT value, suggesting a capital loss. Is this correct?
  3. If not considered a CGT event, am I required to declare the entire amount as income? (Although it's just currency exchange of personal savings)

I haven't been able to find guidance on this specific situation in the forum. Any clarification on the tax obligations and calculations would be greatly appreciated.


Thank you.

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Most helpful response

Most helpful replyATO Certified Response

PollyATO(Community Support)Community Support
ATO Certified Response23 Sept 2024

Hey hey @harshanafdo,


The tax treatment of these transactions depends on whether you're an Australian tax resident, who isn't also a temporary resident, when the transactions commence. How your overseas savings were invested or kept can also change the outcome.


If you were an Australian tax resident and not also a temporary resident and your savings are in an interest bearing overseas savings account, there is a forex realisation event when you withdraw or transfer the foreign funds to acquire the USDT. This forex event can result in a gain or loss which would be assessable income or a deduction.


There will be CGT events when you transfer the acquired USDT (or the right to USDT) to the Australian exchange, and when you dispose of the USDT (or the right to USDT) on the Australian exchange. There may be other CGT events if the transfer is not directly from the foreign exchange to the Australian exchange. Exchange and network fees will be taken into account when calculating any capital gains or losses.

While savings transferred to Australia are not usually income there can be forex gains or loss resulting from the transfers. Note, for Australian residents any withdrawal or transfer from a foreign currency account is a forex event even if the funds are not transferred to Australia or into Australian dollars.


You should apply for private advice to determine the outcome in your particular circumstance.

General information on foreign exchange gains and losses can be found here foreign exchange gains and losses

All replies

Most helpful replyATO Certified Response

PollyATO(Community Support)Community Support
ATO Certified Response23 Sept 2024

Hey hey @harshanafdo,


The tax treatment of these transactions depends on whether you're an Australian tax resident, who isn't also a temporary resident, when the transactions commence. How your overseas savings were invested or kept can also change the outcome.


If you were an Australian tax resident and not also a temporary resident and your savings are in an interest bearing overseas savings account, there is a forex realisation event when you withdraw or transfer the foreign funds to acquire the USDT. This forex event can result in a gain or loss which would be assessable income or a deduction.


There will be CGT events when you transfer the acquired USDT (or the right to USDT) to the Australian exchange, and when you dispose of the USDT (or the right to USDT) on the Australian exchange. There may be other CGT events if the transfer is not directly from the foreign exchange to the Australian exchange. Exchange and network fees will be taken into account when calculating any capital gains or losses.

While savings transferred to Australia are not usually income there can be forex gains or loss resulting from the transfers. Note, for Australian residents any withdrawal or transfer from a foreign currency account is a forex event even if the funds are not transferred to Australia or into Australian dollars.


You should apply for private advice to determine the outcome in your particular circumstance.

General information on foreign exchange gains and losses can be found here foreign exchange gains and losses

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