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Declaring Bitcoin sale

I'm new

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Replies 2

Hi, 

I sold BTC that was purchased over the years and used the converted cash to pay for a mortgage downpayment. I don't keep records of the exact cost of buying the BTC as it happened over the years on multiple platforms. Suffice to say, I sold the BTC, put the money in my savings account to pay for a house downpayment, do I have to pay Capital Gain Tax (CGT) on this? 

 

My questions:

  1. How should I declare the disposal of the BTC?
  2. Do I still have to pay for capital gain tax on the BTC sale?
  3. How much CGT should I declare if I used up all the sales to pay for the house downpayment?

Thank you for your answers. 

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Former Community Support

Replies 0

Hi @InnerWestVS

 

We recommend you have a read of our previous post on declaring bitcoin, it outlines in which circumstances you will be required to CGT and when you need to declare. You can also have a read of our transacting with cryptocurrency information on our site.

 

Hope this helps!

2 REPLIES 2

Most helpful response

Former Community Support

Replies 0

Hi @InnerWestVS

 

We recommend you have a read of our previous post on declaring bitcoin, it outlines in which circumstances you will be required to CGT and when you need to declare. You can also have a read of our transacting with cryptocurrency information on our site.

 

Hope this helps!

Devotee

Replies 0

Where you might be confused is ... jumbling the idea of disposal for personal use. Which only applies I believe if you directly paid your downpayment with cryptocurrency. Which you didn't.

You triggered a capital gains event every time you sold/disposed of your cryptocurrency, if you only bought cryptocurrency.. didn't trade until you sold it all on one event back to AUD lets use this example. As it is the simplest.

You will login to those exchanges you bought Crypto for AUD.... download the trading history, this will tell you the time and date of each trade, the quantity and the price from AUD to crypto.

This is your cost base the sum of all those purchases.. you can either scavange the records from your bank, and highlight every crypto purchase from there... (cost AUD)... or the exchange side where you bought the cryptocurrency at.

But you will need to keep those records for 5 years.

Then now you have your cost base i.e. AUD spent on cryptocurrency.... when you sell all your crypto to AUD (for what ever you use that AUD for later is irrespective)... if you sold it all for less than the cost base.. it is a loss.

If you sold all of that crypto for more AUD than you sum cost base... it is a CGT profit.

For the part of that crypto sold back to AUD which you had held for more than 12months, you get a 50% dispensation on the CGT. If you sold crypto you bought within less than 12months, this is at regular CGT rate.

So... considering the cryptocurrency ledger is kept indefinetly, you have no issue with retaining records. Either record your public addresses and chase transactions that way... or use trading history provided by exchanges you used. Each trade is a taxation event you should keep record of... as it changes the value of your capital gains cost base for the next trade to then be based on. Essentially trades are tracking points for the value of your asset.... BUT it only really matters in the end... your latest trades determine profit against that cost base... well depending if you use LIFO, FIFO.. etc. 

You have some reading to do. But don't confuse keeping of records with how you declare your tax, both should be accurate, but you might keep records that you don't use in your calculations. But you should have records for calculations you make.


 

 

Main points, yes it is CGT as you disposed of cryptocurrency... and each event you record, is disposal of cryptocurrency for another cryptocurrency and record the AUD value at time of disposal, which becomes easier if it was AUD you disposed of cryptocurrency for directly in one step. If you disposed of cryptocurrency to another and another and another back to AUD... then you just have more steps in your spreadsheet, but the outcome is the same.

If you have no more cryptocurrency, technically it is easy... you're just summing up all of you AUD spent, and all of your AUD you got out of it.. and that is the Capita Gain (asset profit) the ATO needs you to declare on that years tax (of disposal date). Or it is a loss... again if you have less AUD now than you spent on crypto. This is why it is good to choose when and how much of, or which cryptocurrencies you dispose of... and be prepared to declare that event as it is a taxable disposal of an asset... like if you bought a car, for 20 bucks, they want to know if you sold it for 2000 bucks... as you made effectively 1800 income, but it is taxed as capital gain not income being an asset. If you noticed I made an error there, then you're on your way.