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Re: Crypto currency tax

Newbie

Views 1564

Replies 5

My question is this:

 

How are you taxed on crypto currencies? I understand that if you invest 10k and sell 15k you pay capital gains on the 5k. 

 

But what if you have made 10-15 purchases of bitcoin/etherium with AUD? What happens when you convert SOME of it back to AUD to reinvest it? How is that taxed? Say I put in 1k total worth of ETH (at various points in time) and then sell 1ETH worth after the price rises (let's say $300/ETH at the time). I then reinvest that $300 when the price is at $200/ETH and purchase 1.5 ETH. My understanding is that the $300 is taxed on the gain you have made by unit value (ETH), in this case, compared to what 1ETH was worth when it was purchased. But what if you have purchased ETH 10-15 times, each with different values for 1ETH? 

 

Cheers

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Taxicorn

Replies 4

@BY27 

 

Every time you exchange a cryptocurrency for another cryptocurrency or to $AUD you incur a capital gain event and need to calculate any loss or gain.

Regardless of how many times it has happened.

 

 

5 REPLIES 5

Most helpful response

Taxicorn

Replies 4

@BY27 

 

Every time you exchange a cryptocurrency for another cryptocurrency or to $AUD you incur a capital gain event and need to calculate any loss or gain.

Regardless of how many times it has happened.

 

 

Newbie

Replies 3

So a simple matter of counting all the purchases in a financial year as expenses and all trades (whether crypto to crypto or crypto to AUD) as a sell and determining your overll profit/loss from this? 

Taxicorn

Replies 2

@BY27 

 

You can't add together all of the purchases.

Every time you exchanged it, it needs a gain or loss calculated.

Once you have a gain or a loss for every transaction you can then determine your overall capital gain position.

 

Remember to sepearte anything held longer than 12 months as those exchanges qualify for a 50% discount.

 

 

Newbie

Replies 1

I understand. But now do you calculate a loss/gain for each transaction? If I put in amounts of $20, $50, $100,$27,$250 etc of AUD to ETH (multiple different deposits) and then choose to sell (lets say 1ETH) $220, then how do you possibly calculate the intial value of that 1ETH when the amount that went into account came from several different amounts with a different ETH value at each deposit?

Taxicorn

Replies 0

@BY27 

 

The purchase price is the best way to calculate the cost of the cryptocurrency. However, when specific identification of the crypto being sold is not possible (which can happen quite often during crypto trades), the taxpayer needs to decide whether to use the FIFO (First In First Out) or the LIFO (Last In First Out) principle. While there is no explicit clarity on which method is preferred by the ATO, most experts recommend FIFO.