ATO Community

Re: Crypto Minning in the name of a minor

Newbie

Views 1860

Replies 1

Hi

 

I would like to buy some crypto minning equipment and mine crypto in the name of my child.

 

Per

 

https://www.ato.gov.au/Individuals/Investing/In-detail/Children-and-under-18s/Your-income-if-you-are...

 

children under 18 are taxed at a higher rate. This rule was introduced to discourage adults from diverting income to their children.

 

My question is if we spend all generated income to purchase additional minning equipement will we have to declare this income and expense every year in a tax return for the child ?

 

Thanks

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Accepted Solutions

Most helpful response

Former Community Support

Replies 0

Hi @G_22,

 

Thanks for your post – please accept our apologies for the delay in our response.

 

Your question raises a few factors you’d need to consider carefully:

  • Is the mining designed to allow your child to access cryptocurrency as a personal use asset? Generally speaking, if you acquire cryptocurrency for investment purposes, the capital gains tax ‘personal use asset’ exemption will not apply, and CGT will be calculated on disposal of the cryptocurrency.
  • Will the mining be conducted in a businesslike way? Some miners operate in a way that makes their activity more like a business than a hobby, and you may need to register this activity as a business. Our checklist can help you work out if the planned mining meets the characteristics of a business.
  • If your proposed activities (a) lead to a capital gain or loss or (b) are businesslike in nature, yes, you may need to lodge a tax return on behalf of your child.  Our ‘do I need to lodge?’ calculator can give you a more definitive answer. A person’s age is not a defining factor in declaring their income on a tax return.
  • As you’ve pointed out, there are special tax rates on children’s income. You would need to establish if the income is ‘excepted income’ before you can work out how much tax you can expect to pay. If all the income is excepted income, it will be taxed at standard marginal rates; income that isn’t excepted will be taxed at higher rates.

We can only provide general information here on the Community; if you’d like more definitive info you can ask us to provide a private ruling. Private rulings are a free service where we explain how we think tax law applies to your situation. We usually reply with 28 days.

Hope that helps!

1 REPLY 1

Most helpful response

Former Community Support

Replies 0

Hi @G_22,

 

Thanks for your post – please accept our apologies for the delay in our response.

 

Your question raises a few factors you’d need to consider carefully:

  • Is the mining designed to allow your child to access cryptocurrency as a personal use asset? Generally speaking, if you acquire cryptocurrency for investment purposes, the capital gains tax ‘personal use asset’ exemption will not apply, and CGT will be calculated on disposal of the cryptocurrency.
  • Will the mining be conducted in a businesslike way? Some miners operate in a way that makes their activity more like a business than a hobby, and you may need to register this activity as a business. Our checklist can help you work out if the planned mining meets the characteristics of a business.
  • If your proposed activities (a) lead to a capital gain or loss or (b) are businesslike in nature, yes, you may need to lodge a tax return on behalf of your child.  Our ‘do I need to lodge?’ calculator can give you a more definitive answer. A person’s age is not a defining factor in declaring their income on a tax return.
  • As you’ve pointed out, there are special tax rates on children’s income. You would need to establish if the income is ‘excepted income’ before you can work out how much tax you can expect to pay. If all the income is excepted income, it will be taxed at standard marginal rates; income that isn’t excepted will be taxed at higher rates.

We can only provide general information here on the Community; if you’d like more definitive info you can ask us to provide a private ruling. Private rulings are a free service where we explain how we think tax law applies to your situation. We usually reply with 28 days.

Hope that helps!