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Taxable percentage on profits from crypto?

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Hi. I have been purchasing Bitcoin and other cryptocurrencies since July 2017. I have bought them in order to trade them and make profit.

The cryptocurrencies I have bought have increased in value and I have been trading them for other undervalued cryptocurrencies.

Can you tell me what the tax rate I will have to pay on these profits when I go to trade them back into Aus dollars. If I have held them for less than 12 months...And can you tell me the rate if I hold them for longer than 12 months.

Also my mother is on a disability pension. She is 72. She has also purchased some cryptocurrencies and is curious to know what her tax rate will be when she cashes them in and if it will affect her pension benefits.

We have both made over $10,000 AUD in profit.

 

Any assistance on these queries will be much appreciated.

Thank you.

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Taxicorn

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Not sure exactly which is "correct" but I wouldn't be paying anybody $2,000 to set something up for me without knowing exactly what, why & how they are doing it.

 

I, personally agree with Number 1.

 

Look at it this way, a Share trader can also have 'other' investments that are not part of their trading business.

As long as these are clearly identified separately at tax time you should be fine.

In fact keeping separate wallets is a very good idea.

 

Better still ask for a private ruling from the ATO regarding your exact situation. It will cost you $0 and you have the confidence knowing that at least as far as the ATO are concerned you are doing the right thing.

 

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Taxicorn

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I will try and answer the questions as best as I can with the provided information:

 

(1) As you have bought them with a view to trade them frequently this will be viewed as carry on a trading business with the ATO and will be treated as such.

 

(2) You will be taxed on the profit made, which will be the difference between what value you trade them for and the amount that you bought them for minus any  operating/trading expenses.

 

For example bought 2 bitcoins for AUD $1,000, then when vaue was $5,000 traded them for 20.5 litecoins (value AUD $5,000) = profit at time of trade = $4,000 minus trading and running cost of $150 = $3,850.

 

The profit is at the time of trade NOT just when traded back to $AUD.

 

As a trader there is no CGT discount.

 

The amount that you will be taxed depends on your total taxable income when adding on this profit.

 

In regards to your mother, it sounds like she will be classified as an investor so she will have the benefit of a CGT discount if held longer than 12 months.

 

How much tax she will pay again depends on her total taxable income.

 

 

 

 

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Hi Dynamo.

Thanks for the reply.

 

I plan to buy into some ICO's and hold for longer than 12 months in a seperate wallet. At the same time as trading occasionally some other coins into more undervalued coins and keeping these trades in a seperate wallet.

 

 

My question is; Can I be taxed as an investor for the profits on coins I have not touched in over 12 months.

As well as be taxed as a trader on the profits from coins that I have held for under 12 months.

 

I spoke to two accountants yesterday regarding this.

 

One said I can store those coins in a seperate coin wallet and do not touch them. He also advised me to document an investment strategy plan for these investments held in the said wallet. Then if I am going to trade other coins, to keep them in another wallet. He said that I can in fact be classified as a trader and investor when it comes to working out CGT during financial year.

 

The other accountant recommended me setting up a trust and opening up a wallet in the said trusts name and holding my ICO investments in the trusts wallet for longer than 12 months so that they can be classified as an investment seperate from my activities.

That way I can trade crypto under my own name and be taxed as a trader. He also quoted me 2000 dollars for his services to set up the trust.

 

So my next question is, Which is the correct advice?

 

Kind regards,

Scott White.

 

 

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Best answer

Taxicorn

Replies 2

Not sure exactly which is "correct" but I wouldn't be paying anybody $2,000 to set something up for me without knowing exactly what, why & how they are doing it.

 

I, personally agree with Number 1.

 

Look at it this way, a Share trader can also have 'other' investments that are not part of their trading business.

As long as these are clearly identified separately at tax time you should be fine.

In fact keeping separate wallets is a very good idea.

 

Better still ask for a private ruling from the ATO regarding your exact situation. It will cost you $0 and you have the confidence knowing that at least as far as the ATO are concerned you are doing the right thing.

 

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Replies 1

How do I ask for a private ruling

 

Thanks

Scott.