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Thanks for your patience while we worked through these cryptocurrency enquiries.
Based on the scenario you outlined in your original post, you’d be subject to CGT on the purchase of goods. Capital Gains tax applies to the disposal of assets - including items of cryptocurrency. If you sell or exchange cryptocurrency assets CGT can apply.
For assets with costs (to you) under $10,000 and used ‘personally’, a ‘personal use’ exemption can apply on disposal of the asset. In the cryptocurrency context ‘personal use’ can apply where an owner acquires cryptocurrency with the intention of buying items for themselves.
However, in your example, where you chose to hold the cryptocurrency so it increased in value, it would not be acquired with the aim of buying personal use items.
We’ve posted a knowledge base article here in the Community that explains our view on personal use assets – check it out here.
Thanks for posting! We’re sorry for the delay in replying, and we appreciate your patience.
If you’re purchasing cryptocurrencies as an investment, capital gains tax rules will apply. If you make a profit when you dispose of your cryptocurrency, you’ll make a capital gain; if you lose money, you’ll make a capital loss.
Keeping detailed records is important when it comes to managing your capital gains tax (CGT) obligations. You’ll need to keep the following records in relation to your cryptocurrency transactions:
You also need to calculate your capital gain or loss every time you dispose of a capital asset – in this case, when you dispose of one cryptocurrency and acquire another. This will also apply if you choose to “cash out” your crypto investments to fiat currency (or AUD).
Hope that helps!
Hi, "Any personal use asset you acquired for less than $10,000 is disregarded for CGT purposes. If you did mine a small amount of Bitcoin as part of a hobby then your cost is generally only the actual costs incurred by you".
A currency was purchased for AUD$50 and exchanged for bitcoin, bitcoin then climbed in price to AUD$9000. Say a profit was made in the millions, how would this be taxed? It was acquired for less than 10K, so there should be no tax on to pay.
As an addition. Tax payable on cryptocurrency is far to complex.Even accountants are struggling with the interpretations laid down by the ATO. Regardless of how cryptocurrency is acquired, tax should only be payable on exchanging (sale) to a fiat currency.
Bitcoin is property and is an asset, and as such tax is not paid on it until it is disposed of.
Thanks for your post. Your post raises a few points to consider:
Hopefully this additional information helps to explain the tax treatment of cryptocurrencies. If you'd like more tailored information based on your circumstances, you can contact our early engagement team to discuss how we think tax law applies to your personal situation.
ATO has published guidelines and it's pretty simple to read. Here's some of them in a simplified way. https://hackernoon.com/guide-for-understanding-cryptocurrency-taxes-in-australia-23f32474a229
Also, record keeping is one of the important things in this volatile conditions. Since you need to keep track of every AUD to BTC transactions, BTC to alts transactions and back to Fiat if you've ever sold. Keeping all this is difficult.
There are few tools like the one mentioned in above article which could help you consolidate your transactions, review them and calculate your capital gains. All the best for upcoming tax season.
Hey there! The scene with capital gains calculation i.e. the Bitcoin tax has changed a lot since we started discussing this. Now we have got good amount of tools with varying offerings. I've given multiple tools a try like cryptotaxbot, beartax and cointracking - All of them are paid, but the question is to check what you get for your money! #bangforyourbuck
cointracking is the one which is well known for everyone - been using it for portfolio. Worked well as a portfolio but for tax calculation, there are a lot of negative balances and errors.
beartax is one I felt satisfied and used it to get my tax documents. moderate number of exchanges, but those you need. Pricing is reasonable for the support and reliable results I've got
mycryptotaxbot is AU based, but charges for more than One exchange. List fo exchanges look static as nothing was happening.
Will evaluate more and let you guys know. Thanks for reading.