• 45 Online
  • 12181 Members
  • 16231 Posts

Re: Another Bitcoin clarification question

Ask a question

This conversation has been closed. Please start a new thread.

Ben
Newbie

Views 2002

Replies 4

Thank you to the ATO for providing the Tax Treatment advice re. Bitcoin.

 

I have a question about the paragraph relating to Using bitcoin for personal transactions, which says:

"Generally, there will be no income tax or GST implications if you are not in business or carrying on an enterprise and you simply pay for goods or services in bitcoin (for example, acquiring personal goods or services on the internet using bitcoin).

Where you use bitcoin to purchase goods or services for personal use or consumption, any capital gain or loss from disposal of the bitcoin will be disregarded (as a personal use asset) provided the cost of the bitcoin is $10,000 or less."

 

Question 1: Is the $10000 limit for personal use on each transaction, or an annual limit per person, or something else?

 

Question 2: Is the limit of 'goods or services' defined anywhere?

I have two specific examples for this question:

Example A: Using bitcoin (or similar cryptocurrency) to pay to a builder's business bank account for a fence, worth $3000 (using an Australian cryptoconversion service like LivingRoomofSatoshi)

Example B: Using bitcoin (or similar cryptocurrency) to downpay a $5000 portion of my mortgage debt (using an Australian cryptoconversion service like LivingRoomofSatoshi)

 

Thank you.

1 ACCEPTED SOLUTION

Accepted Solutions

Best answer

ATO Certified

Community Support

Replies 2

Hi @Ben,

 

Thanks for posting! We appreciate your patience while we worked through our backlog of enquiries.


Our statement on personal use assets is only intended to apply to cryptocurrency used solely to purchase personal items. This can be where you acquire cryptocurrency to pay for goods or services. 


The CGT exemption doesn’t apply where cryptocurrency is used in ways to increase the value of existing cryptocurrency balances before you use it to purchase goods or services. It can, however, be applied on disposal of an asset whose cost was less than $ 10,000.

 

Thanks.

 

4 REPLIES
Highlighted

Devotee

Replies 0

Hi there Ben

 

As a cryptocurrency enthusist I will make an attempt at your question Smiley Happy

 

 

Paragraph 18 of the Tax determination TD 2014/26. "The inherent nature of bitcoin means that it is generally either used as a means of exchanging if for something of value, or it is kept as a speculative investment."

 

Meaning if you use CC beyond exchanging cash for for cryptocurrency and then exchange that crypto currency to buy products or services.You can also hold cryptocurrency for investment. Beyond these situations   be calling us with your specific situation for advice.

 

Usually this will be in the form of a private ruling.

 

So I do not see a differrence in your two examples.

 

If you bought Bitcoin and spent $20,000AUD then immediatly bought as many gummie bears as you could. The would likely be no increase in value or gain on the origional $20k so no Capital Gain (more money added or lost due to market changes) but there still is a Capital Gain event that occured and this needs to be reported to us in your tax return.

 

Same situation but you held the Bitcoins for a few weeks and now they are  worth heaps and now looking to buy out your neighbours with it      be looking for a private ruling to determine how it is treated for Capital Gains Tax and Goods and Services Tax.

 

https://www.ato.gov.au/General/ato-advice-and-guidance/ato-advice-products-(rulings)/private-rulings...

 

Please note this is my personal view; I’m an ATO employee who chooses to help out here in my own time.

Best answer

ATO Certified

Community Support

Replies 2

Hi @Ben,

 

Thanks for posting! We appreciate your patience while we worked through our backlog of enquiries.


Our statement on personal use assets is only intended to apply to cryptocurrency used solely to purchase personal items. This can be where you acquire cryptocurrency to pay for goods or services. 


The CGT exemption doesn’t apply where cryptocurrency is used in ways to increase the value of existing cryptocurrency balances before you use it to purchase goods or services. It can, however, be applied on disposal of an asset whose cost was less than $ 10,000.

 

Thanks.

 

Newbie

Replies 1

I'm sorry, but this reply is just appaling. 

 

Your use of the english language is seriously questionable. 

 

I quote you... "This can be where you acquire cryptocurrency pay for goods or services. "

 

What does that sentence even mean? It is not a complete sentence. 

 

I quote you further - 

 

"The CGT exemption doesn’t apply where cryptocurrency is used in ways to increase the value of existing cryptocurrency balance before you use it to purchase goods or services."

 

What on earth is this sentence suppose to mean? Again, your sentence is illogical. 

 

If you are here to provide advice and intppretation of the law then at least have the basic abaility to communicate in English.

 

 

 

Initiate

Replies 0

What about gambling with bitcoin and you win.. Does that get taxed
Top Solution Authors