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Mining Cryptocurreny BTC and ETH

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Hi!

 

I just started mining BTC and Ethereum just a small scale in my personal computer at home for fun. I dont hodl it for too long, I convert it after 3-4 weeks to AUD so i can purchase some personal stuff out of it.  I mine ethereum as well as one of my graphics card is better at mining ethereum and covert it to BTC after 1-2 months then convert it to AUD to buy personal stuff as well.  Income from the mining activity would be a lot less than 10,000 per year. 

 

My questions are:

 

1. In my case, is my mining  considered a business and i need to follow this? i read this in ATO site. 

 

Where you are in the business of mining bitcoin, any income that you derive from the transfer of the mined bitcoin to a third party would be included in your assessable income. Any expenses incurred in respect to the mining activity would be allowed as a deduction. Losses you make from the mining activity may also be subject to the non-commercial loss provisions.

Bitcoin held by a taxpayer carrying on a business of mining and selling bitcoin, will be considered to be trading stock. You are required to bring to account any bitcoin on hand at the end of each income year.

GST is payable on the supply of bitcoin made in the course or furtherance of your bitcoin mining enterprise. Input tax credits may be available for acquisitions made in carrying on your bitcoin mining enterprise.

 

2. Or my activity is not a considered a business and I dont need to declare any income in my returns as I use the AUD from my BTC income for personal use and it is under 10,000?

Using bitcoin for personal transactions

Generally, there will be no income tax or GST implications if you are not in business or carrying on an enterprise and you simply pay for goods or services in bitcoin (for example, acquiring personal goods or services on the internet using bitcoin).

Where you use bitcoin to purchase goods or services for personal use or consumption, any capital gain or loss from disposal of the bitcoin will be disregarded (as a personal use asset) provided the cost of the bitcoin is $10,000 or less.

 

 

Thank you so much!

 

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Best answer

ATO Certified

Devotee

Replies 0

Hi @hababdaniel,

 

Thanks for your question! We appreciate your patience as we work through cryptocurrency questions here in the Community.

 

We can provide links to general information here on the Community – if you need specific advice on how tax law applies to your situation, we encourage you to request a private ruling. Private rulings are a free service we provide, and we usually respond within 28 days.

 

Generally speaking, any capital gains from personal use assets are disregarded if you:

  • acquire cryptocurrency (either by purchasing or mining) with the intention to purchase items for personal use
  • have capital gains of less than $10,000 for the entire financial year.

We have examples of personal use assets for CGT purposes in our guide on the tax treatment of cryptocurrencies on our website.

 

This exemption doesn’t apply, though, if you acquire cryptocurrency as investments or in order to conduct business.

 

It’s difficult for us to tell you if you’re running a business – there are a number of factors to consider, and we’d need more information to provide a definite answer. There is no single factor that determines if you are in business, but you need to consider whether:

  • You've made a decision to start a business and have done something about it 
  • You intend to make a profit – or genuinely believe you will make a profit from the activity
  • You repeat similar types of activities.
  • The size or scale of your activity is consistent with other businesses in your industry.
  • Your activity is planned, organised and carried out in a businesslike manner.

If you are operating as a cryptocurrency mining business, check out the section on ‘carrying on a business’ for more information.

Hope that helps!

1 REPLY 1

Best answer

ATO Certified

Devotee

Replies 0

Hi @hababdaniel,

 

Thanks for your question! We appreciate your patience as we work through cryptocurrency questions here in the Community.

 

We can provide links to general information here on the Community – if you need specific advice on how tax law applies to your situation, we encourage you to request a private ruling. Private rulings are a free service we provide, and we usually respond within 28 days.

 

Generally speaking, any capital gains from personal use assets are disregarded if you:

  • acquire cryptocurrency (either by purchasing or mining) with the intention to purchase items for personal use
  • have capital gains of less than $10,000 for the entire financial year.

We have examples of personal use assets for CGT purposes in our guide on the tax treatment of cryptocurrencies on our website.

 

This exemption doesn’t apply, though, if you acquire cryptocurrency as investments or in order to conduct business.

 

It’s difficult for us to tell you if you’re running a business – there are a number of factors to consider, and we’d need more information to provide a definite answer. There is no single factor that determines if you are in business, but you need to consider whether:

  • You've made a decision to start a business and have done something about it 
  • You intend to make a profit – or genuinely believe you will make a profit from the activity
  • You repeat similar types of activities.
  • The size or scale of your activity is consistent with other businesses in your industry.
  • Your activity is planned, organised and carried out in a businesslike manner.

If you are operating as a cryptocurrency mining business, check out the section on ‘carrying on a business’ for more information.

Hope that helps!

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