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CGT calculations when multiple investments are made into one wallet?

Newbie

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Hi community,

 

I think I have my head around the basics of CGT calculations for cryptocurrency but in the following scenario, what's the simplest way to work out CGT owed?

In 2016, 2x BTC are purchased for the price of $1000 each and held to date

In 2021, 2x BTC are purchased and added to the same wallet on the same exchange for the price of $40,000 each for a total of 4x BTC held within this wallet

 

If wanting to then sell 2x BTC one month later at a price of $41,000 each, does the ATO consider the captital gain to be $2000 (2x $1000 profit) on the two most recent BTC acquisitions?

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ATO Community Support

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Hi @doakwolf

 

If you have records, you may be able to identify the shares or units you have sold.

 

If you don't, we will accept your selection of which shares disposed of.

 

You have the option to use a FIFO method, too - so assuming that the first items bought are the first items sold. 

 

In limited circumstances, you can use an "Average cost" method, but that's not applicable here, since you acquired the BTC across multiple periods. 

 

Remember that you cannot use a LIFO - last in first out - method, though.

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Most helpful response

ATO Community Support

Replies 3

Hi @doakwolf

 

If you have records, you may be able to identify the shares or units you have sold.

 

If you don't, we will accept your selection of which shares disposed of.

 

You have the option to use a FIFO method, too - so assuming that the first items bought are the first items sold. 

 

In limited circumstances, you can use an "Average cost" method, but that's not applicable here, since you acquired the BTC across multiple periods. 

 

Remember that you cannot use a LIFO - last in first out - method, though.

Newbie

Replies 2

Thanks Blake. I'm still trying to best understand this FIFO/LIFO rule. In the below link it is mentioned that Boris is able to use a LIFO method:

https://www.ato.gov.au/General/Capital-gains-tax/Shares,-units-and-similar-investments/Identifying-w...

 

Boris' situation is very similar to the example I provided in OP, is there a reason I cannot use a LIFO much like Boris?

Regards.

ATO Community Support

Replies 1

Hi @doakwolf,

 

Apologies, the information @BlakeATO provided is in relation to share traders. If you are an investor you get to choose which parcel of shares/units you are selling/disposing of. The examples relating to Boris can be used when determining what you wish to sell/dispose of first. Bear in mind when you eventually dispose of the other ones you will need to use their original purchase price when working out your cost base. Thereafter you can determine your capital gain or loss. 

 

Links -

Identifying shares or units sold.

Transacting with cryptocurrency.

Cost Base.

 

All the best.

 

 

 

 

Newbie

Replies 0

Thanks Jodie. It's clarified in my mind now Smiley Happy

Understood about original cost base and happy to pay the relevant CGT on that investment when the time comes.

Regards.