CryptoCurrency Trading, a Taxable Income Source?

[#1]

I've created a program that automatically trades cryptocurrencies on a foreign exchange. No fiat currency (such as USD or AUD) is ever involved in the trading process and most of the cryptocurrencies cannot be evaluated in AUD. By buying low and selling high thousands of times a day, it ends up with more cryptocurrency. No Australian dollars are involved in the process, except for when I sell cryptocurrency such as Bitcoin of Ethereum via an Australian Exchange.

I found the following on the ATOs website:

"If you are not carrying on a business of bitcoin investment, you will not be assessed on any profits resulting from the sale or allowed any deductions for any losses made. However, if your transactions amount to a profit-making undertaking or plan then the profits on disposal of the bitcoin will be assessable income."

- https://www.ato.gov.au/General/Gen/Tax-treatment-of-crypto-currencies-in-Australia---specifically-bi...

Does this mean that I could treat the sale cryptocurrencies to AUD as a taxable income source?

If so, would I be able to negate profits with expenses backed up by invoices and records? For example, renting a high-end dedicated server to run the program may cost up to $4000 a year.

[#2 · Accepted solution]

Hi @CryptoTrader,

Thanks for your post! This sounds like a really interesting idea, but we'd need some more information to give you definitive answers to your questions.

In this instance, we'd recommend contacting our early engagement team to discuss the tax implications of your plan. Early engagement will consult with you to:

• discuss your request and outline the early engagement process
• seek your timeframes and critical dates
• explore the tax issues you are seeking advice on
• arrange an initial discussion or meeting
• agree on respective roles and responsibilities
• request a draft application for a ruling, where relevant, with full and true disclosure and relevant supporting information.

You can request a call back or follow up email by completing our online form. 

Thanks.

[#3]

Thank you Amanda. I will get in contact with the early engagement team.