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Re: Foreign Cryptocurrency Exchange Implications

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Hi!

I would just like to further clarify the response to this post about foreign exchanges to better understand, as this read to me as purchases on foreign-based exchanges are not treated as subject to CGT.

 

1. In the case that an Australian resident purchases cryptocurrency using a) AUD or b) a foreign currency (e.g. USD, EUR) on a foreign-based exchange, what is the implication for that person at that point in time? Have they acquired a capital asset that is subject to CGT in Australia?

 

2. In the case that an Australian resident purchases cryptocurrency using a) AUD or b) a foreign currency on a foreign-based exchange and then disposes of it in a foreign currency, what is the Australian tax implication at that point in time?

 

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ATO Community Support

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Hi @CrowsCamp13,

 

Apologies for any confusion from reading the link you've included. Although cryptocurrency is not considered tangible Australian property (such as real estate, for example), exchanging and disposing of cryptocurrency is considered a Capital Gains tax event.


 1. Cryptocurrency is considered to be a CGT asset; any gain from disposing of it (including exchanging  one form of  cryptocurrency for another form of cryptocurrency) would be subject to capital gains legislation.
    
 However, some capital gains or losses from the disposal of cryptocurrency may be disregarded in the following situations:    

 

  • the cryptocurrency is a 'personal use asset', meaning it's used mainly to purchase items for personal use or consumption
  • a capital gain is made on a personal use asset acquired for less than $10,000 (personal use assets purchased for less than $10,000 are disregarded for CGT).

    
Cryptocurrency is not a personal use asset if it is kept or used mainly:

 

  • as an investment
  • in a profit-making scheme, or
  • in the course of carrying on a business.

 
2. Capital gains or losses from the disposal of cryptocurrency would need to be reported in Australian dollars (AUD) on your income tax return. We'll accept information you provide regarding the value of your cryptocurrency and it's AUD value so long as you use a reputable exchange sources when finding this information, and can provide this information if we ask for it.

 

I've located some additional information below that will provide further details on income tax obligations and cryptocurrency:

 

ATO Webpage- Tax treatment of cryptocurrencies

ATO Webpage- Transacting with cryptocurrency

Community Post- Confused about tax on cryptocurrency

ATO Webpage- myTax 2020 Capital gains or losses

 

I hope this helps answer your question Smiley Happy

 

RachATO

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Most helpful response

ATO Community Support

Replies 0

Hi @CrowsCamp13,

 

Apologies for any confusion from reading the link you've included. Although cryptocurrency is not considered tangible Australian property (such as real estate, for example), exchanging and disposing of cryptocurrency is considered a Capital Gains tax event.


 1. Cryptocurrency is considered to be a CGT asset; any gain from disposing of it (including exchanging  one form of  cryptocurrency for another form of cryptocurrency) would be subject to capital gains legislation.
    
 However, some capital gains or losses from the disposal of cryptocurrency may be disregarded in the following situations:    

 

  • the cryptocurrency is a 'personal use asset', meaning it's used mainly to purchase items for personal use or consumption
  • a capital gain is made on a personal use asset acquired for less than $10,000 (personal use assets purchased for less than $10,000 are disregarded for CGT).

    
Cryptocurrency is not a personal use asset if it is kept or used mainly:

 

  • as an investment
  • in a profit-making scheme, or
  • in the course of carrying on a business.

 
2. Capital gains or losses from the disposal of cryptocurrency would need to be reported in Australian dollars (AUD) on your income tax return. We'll accept information you provide regarding the value of your cryptocurrency and it's AUD value so long as you use a reputable exchange sources when finding this information, and can provide this information if we ask for it.

 

I've located some additional information below that will provide further details on income tax obligations and cryptocurrency:

 

ATO Webpage- Tax treatment of cryptocurrencies

ATO Webpage- Transacting with cryptocurrency

Community Post- Confused about tax on cryptocurrency

ATO Webpage- myTax 2020 Capital gains or losses

 

I hope this helps answer your question Smiley Happy

 

RachATO