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Re: Cryptocurrency

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Hi 

If i purchased a Cryptocurrency token with say Etherium or Bitcoin that is classed as a CTG Taxable event as its Crypto to Crypto?

I have to show the Etherium or Bitcoin getting disposed of to buy that Cryptocurrency, whether its purchased from an ICO or purchased from an exchange.

I have to then work out if there is a CGT Gain or Loss, from this Disposal? Is there any spreadsheets the ATO offers to show this Disposal ? 

 

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Best answer

Devotee

Replies 0

Hi @GreyW,

 

Check out our knowledge base article How do I calculate capital gains tax on cryptocurrencies? for detailed info on when CGT applies and how to work it out.

 

Thanks!

3 REPLIES 3

Devotee

Replies 1

ICO gives you X coins/tokens for 1 ETH.. it usually shows the rate, but the rate is 1 ETH / number of coins = how much ETH per coin/token. what you want to know is... how much was 1 ETH worth (in Australian Dollars) when you sent it in to the ICO address... because that is when it left your property and became the ICO companies'/project. 

this will not only tell you... how much capital gain you've made since you first bought that 1 ETH (with btc or aud)... but also.. set the cost base aka the value of the tokens/coins you have from the ico.

It sounds complicated but it is simple.

you spent 500 AUD on crypto... no gain no loss.. that is cost base of what you bought right... you sold it for something worth 600 AUD... obviously your crypto/assets increased in value 100 AUD.. otherwise you wouldn't have been able to trade it for new assets worth 100 dollars more.... .. so now you have 600 AUD... 100 profit.. we call capital gain.. ... you would have to sell you 600 AUD of what ever... for 400 AUD... to have .. 400 AUD now worth of assets... and you have made a capital loss of 100 AUD... because .... -100 profit + -100 original capital/against costbase investment. 

lets say you cash nothing out to aud... for simplicity sake... and spend that 500AUD.. then later 400AUD...on crypto, this means your costbase is now 900AUD (obviously you got 500AUD of something worth what ever amount of what ever, at what ever time it gave you what ever in return, and 400AUD later, it changed... which isn't relevant to profit/loss... but you do need to record those times, ammounts sold and received, what exchange, maybe trade-ID if available as a 'tax event' means it needs to be recorded for accounting and legitimacy of your business/trading).

your cost base is 900AUD even if your 500 AUD is now 400AUD... and your second 400AUD is now 200AUD in capial assets. that would mean cost base 900 - (400+200) = capital loss of 300 AUD. your change in asset value is the tax event that updates your capital value at the time of trade.. your cost base always adds up to how much fresh cash you've spent on crypto.

if you sell crypto to AUD... then back into crypto, this is where your cost base doesn't change, unless you are spending profit. if you're spending at a loss, it is a capital loss, as your assets are the currency you're spending, on more assets/currency. but the ato is calling it capital... nonetheless it is just basic profit or loss. your money is worth less now, or worth more now... that's all it is. 

once you get a handle on the simplicity of recording... every trade... = profit or loss... then captial gain is just the where you're at now, vs. where you started in July1st last year.

cointracking has a template https://cointracking.info/import/import_xls/ which you can download... but it doesn't help unless you load it into the site. OR... record the price of the base trading pair (crypto: btc/eth/ltc etc) in AUD at that time.

basically... your exchange should have detailed records of your trades... just copy and paste them into a spreadsheet.. try to make them uniform if from multiple exchanges.. and you will need to include the AUD value against every traded amount (at that date/time)... (this is just once per trade as the amount sold for what is gained, is equivalent AUD value at that time obv).. the capital gain is calculated not by the difference between your buy and sell price compared to elsewhere at that time.. but obviously the change in aud value from when you bought your asset first to when you're now selling/trading/disposing of it (flipping).

which is why ... what you're holding is worth now what you paid for it in the eyes of the ATO... because you need to dispose of it to determine a capital gain or loss since you last traded it/create a capital gains tax event. unless you use a different method to evaluate your capital value as trading stock (for business).

Highlighted

Devotee

Replies 0

Bought Ammount }}  Currency  }} Sold Ammount }} Currency   }} Exchange Name  }} Time                             {{ AUD price 
200tokens                 RVT                 1                       ETH               Rivetz ICO            August 2nd 5pm 2017 -    Value = 400 AUD
1                              ETH                220                    AUD              CoinBase              July 20th 2am 2017  -    Cost Base = 220 AUD

You made 2 capital events this year (trades).... and 180AUD in unrealized capital gains, added to your income... as taxable income.

220 cost base ... 400 AUD value ... 180 value increase = capital gain.  (400AUD is value of 1 ETH or 200 RVT as trade is equivalent value... at time of trade/event. setting in place capital gain or loss record against 1ETH cost base.. and setting the cost base of 200 RVT tokens).

your RVT is not a capital tax event, until disposed of because you only know how much it was worth, not much much profit or loss it has made... and the tax% on profit of the eth/asset has already been paid.

Best answer

Devotee

Replies 0

Hi @GreyW,

 

Check out our knowledge base article How do I calculate capital gains tax on cryptocurrencies? for detailed info on when CGT applies and how to work it out.

 

Thanks!

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