ATO Community

Is ABN needed?

Newbie

Views 142

Replies 1

Hello,

Does Bob need an ABN based on the example situation below? If so, when Bob files his taxes, does Bob submit the profit in the Capital Gains section or in the Business Income section? 

Could you please provide 2 different answers based on the 2 differing situations below, unless of course both situations have the same answer.

 

E.g.

Bob has been trading cryptocurrency with the intention of making profit. Bob has been trading for 2 months doing 5 trades a week. At the start of the 2 months Bob had $1000 and now after trading for 2 months he now has $100,000. 

 

E.g. 

Bob invested into 5 cryptocurrencies with the intention of making profit. He bought and these cryptocurrencies for a total of $5000, and after holding them for 2 months sold them all for a profit of $90,000.

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

ATO Community Support

Replies 0

Hi @lego12

 

There's more that goes into the difference between an investor (hobbyist) and a trader (business).

 

You need to look at things like:

  • the nature of the activities
  • whether your actions display repetition, regularity, and the scale of the activities
  • the organisation your activities show, and
  • the total funds invested.

In the examples given, your first example begins to show more traits of a trader than the second example does, but it still may be an investment depending on the nature and organisation of the activities.

 

If the activity is shareholding as an investor, it is reported under the capital gains section. If the activity is trading, it is a business income, exempt from capital gains due to the nature of being a business asset.

 

You can read more about shareholding as an investor or share trading a business on our website.

1 REPLY 1

Most helpful response

ATO Community Support

Replies 0

Hi @lego12

 

There's more that goes into the difference between an investor (hobbyist) and a trader (business).

 

You need to look at things like:

  • the nature of the activities
  • whether your actions display repetition, regularity, and the scale of the activities
  • the organisation your activities show, and
  • the total funds invested.

In the examples given, your first example begins to show more traits of a trader than the second example does, but it still may be an investment depending on the nature and organisation of the activities.

 

If the activity is shareholding as an investor, it is reported under the capital gains section. If the activity is trading, it is a business income, exempt from capital gains due to the nature of being a business asset.

 

You can read more about shareholding as an investor or share trading a business on our website.