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Two CGT events on altcoin withdraw? FIFO.

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Scenario:

I cash out $10,000 in ADA.

To do this I need to sell the ADA for BTC and then I can sell the BTC for AUD and withdraw.

Koinly app utilised FIFO and calculates the CGT on BOTH transactions:

ADA/BTC = $6000 profit

BTC/AUD = $6000 profit!

Because of FIFO the BTC transaction was calculated on the OLDEST BTC I bought, not the immediate prior transaction.

So pulling out $10k in crypto exposes me to a $12,000 CGT event?

 

That cannot be right, right?

In this instance is it ok to mark the second transaction as a LIFO?

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Most helpful response

ATO Certified Response

ATO Community Support

Replies 0

Hi @cryptodude78


It isn't about the transition from one coin to another - it's about the disposal of each type of coin. This is why it's considering two capital gain events.

 

From the sounds of it, though, the software isn't accounting for it correctly.

 

When you dispose of the ADA, that's its own event. When you dispose of the BTC, that's also its own event.

 

Your capital gain is worked out using: capital proceeds - cost base. You'll do this for each transaction separately.

 

Your BTC will have its own cost base - the market value you acquire it for plus associated expenses. You're only going to have a gain or loss on the few seconds to days it takes for your to acquire and then dispose of the BTC, rather than the entire holding time of your total crypto like it seems your software has calculated.

 

You can read about working out your capital gain or loss on our website.

1 REPLY 1

Most helpful response

ATO Certified Response

ATO Community Support

Replies 0

Hi @cryptodude78


It isn't about the transition from one coin to another - it's about the disposal of each type of coin. This is why it's considering two capital gain events.

 

From the sounds of it, though, the software isn't accounting for it correctly.

 

When you dispose of the ADA, that's its own event. When you dispose of the BTC, that's also its own event.

 

Your capital gain is worked out using: capital proceeds - cost base. You'll do this for each transaction separately.

 

Your BTC will have its own cost base - the market value you acquire it for plus associated expenses. You're only going to have a gain or loss on the few seconds to days it takes for your to acquire and then dispose of the BTC, rather than the entire holding time of your total crypto like it seems your software has calculated.

 

You can read about working out your capital gain or loss on our website.