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Re: Losses with crypto currency

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Newbie

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Hi there, 

 

I bought $11.5k worth of various currencies. Out of that I invested $7.8k worth of BTC into a scheme (biggest screw up) which turned out to be a ponzi scheme. I lost $7.8k worth of bitcoin. Would I be able to claim the $7.8k loss as a tax deduction?

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ATO Certified

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Hi @Shah,


Welcome to our Community! @treefairy has provided helpful information. You can find further information about Mining cryptocurrency on our knowledge based article.  Your tax treatment will depend on if you are in the business of trading cryptocurrency or if you are a hobby trader.


I hope this helps, JodieM
 

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Devotee

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that depends I think on how regularly and business like your trading/investing is? good question? was it bitconnect because that wasn't a ponzi and the courts never proved it was, they just delivered (texas) several cease and decist notices, which bitconnect complied with... crashing their token/coin price. they returned everyone's bcc also. 

a ponzi scheme is when new investors is the only incoming revenue that is paid to older investors who then think it works so they sponsor it to get more new investors. and you only get paid by sucking more victims into it. 

bitconnect wasn't a ponzi because in the time it took them to pay 100% profit, the crypto/bitcoin market went up 800% or more in that time. meaning people paid for a garuntee of making daily profit, but it was much less profit than they would have got just holding the bitcoin (or the bitconnect coins themselves instead of loaning them to bcc for investing).

also as a company they paid far more interest than they legally had to (fixed interest), their variable interest was generous because the gains their investments were making were making generous returns... meaning it wasn't a Ponzi again. no new investor capital was needed to keep paying all of their customers/clients.

not to mention when a bug in bitconnect was exploited by users, where it duplicated coins (their access to finite coins) which were withdrawn on mass and crashed the price on nova exchange... bitconnect suspended all accounts until they resolved it, but in that time... they kept paying everyone who didn't rob them.. interest. (after losing millions in bitcoin and bcc tokens) 

people are just angry they lost money, but the real culprit was silver and miler law firm and the texas courts acting on response to pebcac noob users of the platform who cried wolf when the service went down due to the hack/glitch for two weeks.

Newbie

Replies 1

no, it was USI Tech (pyramid model). They paid ne 0.75% returns a day for 10-11 days and then stopped paying the interest and principal. My USI account shows the BTC they owe me but I cannot withdraw. They say they will start paying principle amount back once they have recovered their losses from future mining.

Devotee

Replies 0

ahh yeah I heard about them. well good luck getting your coins back. most of the cloud mining contracts weren't very worth while. just get as much evidence as you can encase you get queried Smiley Happy 

I think you need to be in the business of trading to claim losses... for hobby traders you only declare gains that push your income up or w/e. but it is a worthwhile question. hopefully one of the regular accountants here can let you know if you can claim losses.

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Newbie

Replies 1

Yeah!!

The government of Australia is focusing on crypto traders as it forms a task force to ensure tax compliance. By establishing taskforce the government can easily monitor cryptocurrency transactions, as per to the report of the Australian Financial Review.

Australia is the latest country to initiate working on cryptocurrency trading for the goal of the tax.

The government of Australia is deeply worried that crypto investors unable to finance their fair taxes due to profit earned in the recent rise of cryptocurrency. This is the main aim to establish the task force to monitor the crypto investors.

Best answer

ATO Certified

Community Support

Replies 0

Hi @Shah,


Welcome to our Community! @treefairy has provided helpful information. You can find further information about Mining cryptocurrency on our knowledge based article.  Your tax treatment will depend on if you are in the business of trading cryptocurrency or if you are a hobby trader.


I hope this helps, JodieM
 

Devotee

Replies 0

well i'm looking for a job if anyone is hiring. lol 2nd year of a BA in Creative Art. but i'd take a year off to focus on cryptospace.

I think most people just need to use the trading stock method, so they can capture the true value of their assets closer to end of financial year, rather than capturing a pipe dream or myth and paying tax they may never get compensated for.

in my case, this will be my first year over the tax-free threshold, and the tax I will be paying will be money I don't have, and when I declare the losses next year, it won't mean anything because I will be under the threshold again anyway, because i'm a full time student.

rekt

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