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Cryptocurrency Tax

I'm new

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Replies 7

Hi, i'd like to trade cryptocurrency on an Australian exchange but i'd like to clarify a few things before.

 

-CGT is not applied if i invest  less than 10 000 AUD and keep it for more than a year? Right?

-CGT 50% discount will be applied   only if i invest less than 10 000 AUD and keep it for more than a year? Right?

if invest  more than 10 000 AUD, no discount, Right?

The Profit is calculated at the end of every financial year or when you sell it to get back AUD?

Example: i buy bitcoin now and its price goes up. In July, will it be considered as profit if i keep it (so need to declare it as such) or the profit will be calculate once i sell it for AUD?

 

Thanks Nick

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Accepted Solutions

Most helpful response

Taxicorn

Replies 6

(1) Incorrect, if you pay less than $10,000 and use it as a personal use asset it will be tax free regardless of time held.

 Holding item as a personal use asset would require no trading and using it to purchase personal use items/pay bills etc.

 

(2) If you invest amy amount of money in bitcoin and use it as an investment (not as a trading business), you will get 50% discount after 1 year of holding that bitcoin.

So pay $500, invest, wait 1 year, sell for $1000, then $1000-$500/2 = $250 gets added onto your assesable income for the year

or 

 pay $500, invest, sell for $1000 before 1 year , then $1000-$500 = $500 gets added onto your assesable income for the year.

 

Only pay CGT whenever you trade it to another cryptocurrency or to $AUD

7 REPLIES 7

Most helpful response

Taxicorn

Replies 6

(1) Incorrect, if you pay less than $10,000 and use it as a personal use asset it will be tax free regardless of time held.

 Holding item as a personal use asset would require no trading and using it to purchase personal use items/pay bills etc.

 

(2) If you invest amy amount of money in bitcoin and use it as an investment (not as a trading business), you will get 50% discount after 1 year of holding that bitcoin.

So pay $500, invest, wait 1 year, sell for $1000, then $1000-$500/2 = $250 gets added onto your assesable income for the year

or 

 pay $500, invest, sell for $1000 before 1 year , then $1000-$500 = $500 gets added onto your assesable income for the year.

 

Only pay CGT whenever you trade it to another cryptocurrency or to $AUD

Taxicorn

Replies 5

If you Paid $500 and the value at June 30 2018 was $1000, you have made a profit but do not need to declare it until it is eventually exchanged to another cryptocurrency or $AUD.

 

If you are planning on cashing out then wait until  a tax year when your income is the lowest possible to avoid paying more tax (due to your tax bracket).

 

Initiate

Replies 4

After reading some threads here, it seems unfair. We'd pay so much tax on our earnings it'll be hard to make a lot of money. The rules should be changed. Taxing trades between crypto's is unfair.

Taxicorn

Replies 3

Unfortunately every time you trade, you do it to make money, you wouldn't trade for a much lower value would you?

So, like trading shares etc you are making money (at the time of trade), so you must pay tax on earnings.

If there was a guarenteed way of increasing your money and pay 0 tax then eveyone would do it.

 

Trading currency and share trading is basically gambling that is taxed.

 

Initiate

Replies 1

Yeah, I don't have an issue paying tax. Just if I never cash anything back to AUD, I'd have to pay somehow out of my own pocket?

It seems it would be easier to be taxed on amounts you realize back to AUD.

Taxicorn

Replies 0

It is a bit like dividend re-investment.

 

You declare the dividends that you received in your yearly tax but never cash it out.

Initiate

Replies 0

Macfanboy i really appreciate your responses. Can i see an example of 2 senarios:
1) Billy bob earns $70k in his normal day job. He puts in $5k into crypto and turns that into $20k through day trading.
How is that taxed if he is a trader. If after his final trade makes no extra profit before cadhing back to AUD what tax does he pay.
2) how does his tax situation differ if he is considered in conducting business and can claim $2000 in incurred costs?