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Trader vs Investor

Newbie

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Replies 3

In the past two months, i bought a few coins and sold them around 15 coins. . Most of the time the reason for selling them was they were scam/or prone to bieng rugpulled.Some coins were bought and sold  in one day as soon as i realized they were going to be rugpulled. Due to the volatile nature of crypto i had no choice to sell coins at times, even if the plan was to to be long term invested. 

 

At the end i have two coins now which i have no plans on selling them, or trading them. 

 

I have not bought crypto before mid-march, and wont be selling my coins for atleast 1  year, but with crypto due to the volatile nature some times its necessary to do so. 

 

Have no plans or did have plans to run it like a business, but i did do around 150 trade transactions in the two months. 

 

Am confused as i think i should be an investor, as there was no regularity in my buys and sells. alot of them were bnb, eth, and aud, as they are all necessary to transact to buy other coins. 

 

Any guidance would be helpful on wether i am a trader or investor. 

 

 

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Most helpful response

ATO Certified Response

ATO Community Support

Replies 1

Hi @Jopro

 

@Daschel has given some great advice! Let's elaborate more on the other facets beyond 'intention' too. You can, after all, run a business for only a couple of months.

 

When you're determining whether you're a trader or investor, you need to consider a few things:

  • Intention: Do you intend to earn money from the coins through dividends/airdrops/staking as an investor would, or through selling the coins for profits?
  • Repetition, volume, and regularity: How often do you buy and sell the coins? Is there a pattern to it? How much of your wallets are you selling at a time? The bigger/more frequent this is, the more likely you are to be a trader.
  • Organisation in a business-like way: Do you analyse the market, your type of coin, and any new coins you invest in before making any major moves?
  • Amount of capital invested: How much have you invested? Again, the higher this number, the more likely you are to be a trader.

 

Ultimately, because tax is self-assessed, you'll need to decide for yourself based on your personal circumstance. However, you can read more on trading or investing on our website.

 

3 REPLIES 3

ATO Certified Response

Enthusiast

Replies 0

Hi @Jopro ,

I believe that a major part of being treated as a professional trader by the ATO is your intention to do so.  You've said that you're not intending to trade regularly or professionally, so I'd say you're pretty safe to look at your tax obligations as an individual.

Make sure you record each "disposal /CGT event", so you can calculate your capital profit and loss, then you can work out how much CGT you'll likely to be liable for.

Have a look here for what the ATO consideres a "disposal /CGT event".

https://www.ato.gov.au/general/gen/tax-treatment-of-crypto-currencies-in-australia---specifically-bi...

For example, if you use Eth to buy BNB, then this would be a disposal of your Eth, and would trigger a CGT event.

 

Most helpful response

ATO Certified Response

ATO Community Support

Replies 1

Hi @Jopro

 

@Daschel has given some great advice! Let's elaborate more on the other facets beyond 'intention' too. You can, after all, run a business for only a couple of months.

 

When you're determining whether you're a trader or investor, you need to consider a few things:

  • Intention: Do you intend to earn money from the coins through dividends/airdrops/staking as an investor would, or through selling the coins for profits?
  • Repetition, volume, and regularity: How often do you buy and sell the coins? Is there a pattern to it? How much of your wallets are you selling at a time? The bigger/more frequent this is, the more likely you are to be a trader.
  • Organisation in a business-like way: Do you analyse the market, your type of coin, and any new coins you invest in before making any major moves?
  • Amount of capital invested: How much have you invested? Again, the higher this number, the more likely you are to be a trader.

 

Ultimately, because tax is self-assessed, you'll need to decide for yourself based on your personal circumstance. However, you can read more on trading or investing on our website.

 

Enthusiast

Replies 0

Thanks so much for that @BlakeATO .

I'm loving this community chat - I'm learning so much!

 

Cheers