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Crypto profits to repay personal business loan

I'm new

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Hi

i just basically want to know as this our first year being open as a businsss, we want to do the right thing by the Ato but also we are in over our heads with debt because of a private loan we took to get the business started. My question is by this year tax time our crypto deposits (profits) should be reaching the 12 month mark so can we use those profits after 12 months to pay the business loan plus interest off or would we still be laibke to pay Capital gains tax? Just trying to find the quirkest most cost effective simpliesrt  way to repay this loan so it's not hanging over our heads  and can put us in a good starting position to then make our business Profitable.. so we're no longer in debt and claiming a loss for the years to come but to use the profit so the following year we can be a profitable bisinsss,  which would also be beneficial to the ato also

. I've probably over complicated the question does this make sense what I'm trying to ask? 

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Most helpful response

ATO Community Support

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Hi @Allana 

 

It depends on if the business is an investor or a trader. Regardless, profits will be taxable to the entity that holds the crypto.

 

If the entity is an investor in crypto, capital gains tax will still apply to any profits made. Remember that the net capital gain isn't the whole amount you withdraw - it's the profits on your cost base.

 

If the entity is a trader, any crypto will be held as trading stock, and income tax will apply, rather than capital gains.

 

You can read about shareholding as investor or share trading as business (which talks about shares, but applies to cryptocurrency too), and working out your capital gain on our website.

 

1 REPLY 1

Most helpful response

ATO Community Support

Replies 0

Hi @Allana 

 

It depends on if the business is an investor or a trader. Regardless, profits will be taxable to the entity that holds the crypto.

 

If the entity is an investor in crypto, capital gains tax will still apply to any profits made. Remember that the net capital gain isn't the whole amount you withdraw - it's the profits on your cost base.

 

If the entity is a trader, any crypto will be held as trading stock, and income tax will apply, rather than capital gains.

 

You can read about shareholding as investor or share trading as business (which talks about shares, but applies to cryptocurrency too), and working out your capital gain on our website.