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How do I calculate capital gains tax on cryptocurrencies? Expanded

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Based on the example given here: https://community.ato.gov.au/t5/Tax/How-do-I-calculate-capital-gains-tax-on-cryptocurrencies/ta-p/10...

 

If an individual with an income of $100,000, invested $1000 in cryptocurrency C priced at $0.00002, receiving 5000000 tokens, and set four exit points at:

 

10000000.0 * $0.0025 = 25000.0

10000000.0 * $0.0075 = 75000.0

10000000.0 * $0.0125 = 125000.0

10000000.0 * $0.0175 = 175000.0

 

This individual also converted 500 of crypto A to 750 of crypto B valued at $1200 at time of conversion.

How would the above be calculated?

For some additional complexity:

This individual having come into a large sum donates $50,000 to UNICEF and $50,000 WIRES. What change if any is applied to the previous scenario?


Thank you in advance!

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Accepted Solutions

Most helpful response

ATO Community Support

Replies 0

Hello @dd_90

 

Good questions! I have broken it down into three sections for you. One for each of your scenarios:

 

Cryptocurrency C:

In the example you provided there are 4 exit points (sell out points) and the individual is holding 1000000 tokens. 

Each exit point would be treated as a disposal and an individual capital gains tax event. In this example there are 4 capital gains tax (CGT) events.

The $1,000 invested in cryptocurrency C would become the cost base and would be apportioned between each of the 5000000 tokens you received. E.g. $200.00 per 1000000 tokens.

 

Cryptocurrency A to B.
The individual has disposed of Cryptocurrency A to acquire Cryptocurrency B. This disposal will be considered a CGT event. The individual will use the market value of the Cryptocurrency at the time of the exchange to calculate their capital gain.

 

Donations to UNICEF and WIRES.
Donations or gifts of cryptocurrency will be treated as a disposal of a CGT asset and trigger a CGT event. In this scenario the individual has two capital gains events.

 

More information about exchanging and gifting cryptocurrency can be found on our Transacting with cryptocurrency page on our website.

 

The example you linked in your enquired provides some good information on how to calculate a capital gain.

https://community.ato.gov.au/t5/Tax/How-do-I-calculate-capital-gains-tax-on-cryptocurrencies/ta-p/10...

1 REPLY 1

Most helpful response

ATO Community Support

Replies 0

Hello @dd_90

 

Good questions! I have broken it down into three sections for you. One for each of your scenarios:

 

Cryptocurrency C:

In the example you provided there are 4 exit points (sell out points) and the individual is holding 1000000 tokens. 

Each exit point would be treated as a disposal and an individual capital gains tax event. In this example there are 4 capital gains tax (CGT) events.

The $1,000 invested in cryptocurrency C would become the cost base and would be apportioned between each of the 5000000 tokens you received. E.g. $200.00 per 1000000 tokens.

 

Cryptocurrency A to B.
The individual has disposed of Cryptocurrency A to acquire Cryptocurrency B. This disposal will be considered a CGT event. The individual will use the market value of the Cryptocurrency at the time of the exchange to calculate their capital gain.

 

Donations to UNICEF and WIRES.
Donations or gifts of cryptocurrency will be treated as a disposal of a CGT asset and trigger a CGT event. In this scenario the individual has two capital gains events.

 

More information about exchanging and gifting cryptocurrency can be found on our Transacting with cryptocurrency page on our website.

 

The example you linked in your enquired provides some good information on how to calculate a capital gain.

https://community.ato.gov.au/t5/Tax/How-do-I-calculate-capital-gains-tax-on-cryptocurrencies/ta-p/10...