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Cryptocurrency: trader as business, holding as investor and personal use asset

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If an individual's cryptocurrency activies have been classified as 'trading as business' (https://www.ato.gov.au/General/Capital-gains-tax/Shares,-units-and-similar-investments/Shareholding-...), does any and all disposal of their capital assets have to be treated as disposal of trading stock on a revenue account, ie. as ordinary income - OR:
1) Can they still apply CGT tax treatment for specific crypto assets that have been bought as an investment and have not been traded ? 
2) Can they still apply personal use asset tax treatement if they have bought <10k of a specific crypto asset with the intention to use it to purchase a personal use asset and can demonstrate that they have indeed done this ?
3) How about if they also held shares as investments - can these still be treated as capital assets subject to CGT (and the 50% discount for holdings >12 months) ?

Example to illustrate: Gertrude day trades Bitcoin and Ethereum, she also invested in NEO which she intends to hold for over a year (and collect dividend type payouts), she also bought <$10k worth of Litecoin which she uses to pay for goods and services. Can the activity be split up an taxed accordingly ?   
If so, how about if Gertrude can demonstrate that there was different intentions and use for separate PARCELS of an asset (eg. she day trades Bitcoin on an exchange, she also long holds a parcel of BTC in a separate wallet address and she uses a separate exchange to buy parcels of BTC to be used for the purchase or personal use assets) ?

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Devotee Registered Tax Practitioner

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You can hold assets on different account under different circumstances although its probably best to get a private ruling in such scenarios, as people's circumstances can be quite variable. I actually use different entities for different types of investment. Company for short term investing , trust for long term holds and I have what are more than likely some personal use assets in my own name but I've gone to a lot of effort to differntiate it all so its easy for me to demonstrate intention on each. 

 

Just remember the onus is on you to prove the circumstances for exemption exist at the end of the day.

1 REPLY 1

Best answer

Devotee Registered Tax Practitioner

Replies 0

You can hold assets on different account under different circumstances although its probably best to get a private ruling in such scenarios, as people's circumstances can be quite variable. I actually use different entities for different types of investment. Company for short term investing , trust for long term holds and I have what are more than likely some personal use assets in my own name but I've gone to a lot of effort to differntiate it all so its easy for me to demonstrate intention on each. 

 

Just remember the onus is on you to prove the circumstances for exemption exist at the end of the day.

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