Hello
Specific question in relation to:
https://www.ato.gov.au/Individuals/Capital-gains-tax/List-of-CGT-assets-and-exemptions/#Collectables
What are my capital gains in this sale of this "Digital Artwork A" purchased and sold with bitcoin? Just so I know how to do my tax return capital gains worksheets when I sell this artwork.
Note:
I do not carry this on as a business. I buy and sell artwork for my personal collection and personal profit and do not treat it , or operate it as a business.
Events:
1. I bought 0.0035 Bitcoin for $200AUD 6 months ago.
2. I used that 0.0035 Bitcoin to transfer to a merchant to purchase Digital Artwork A on the same day.
3. Assume I sell Digital Artwork A for 0.19 Bitcoin on the 17 August 2021, with 0.19bitcoin having a $12,300AUD Fair Market Value on 17 August 2021 according to google/Mainstreamcryptocurrency exchanges.
- I hold the bitcoin.
4. Assume I then exchange that 0.19 Bitcoin for $11,300AUD on 20 August 2021
Questions:
What willl my Capital Gains/Loss events be and what will my total gains/losses be if any?
Can someone please break down my capital gains/loss events. This is my best guess based on what I've read:
1. Since the digital artwork is classified as a "collectable" by the ATO and it was purchased for under $500, it is not subject to CGT.
(according to https://www.ato.gov.au/Individuals/Capital-gains-tax/List-of-CGT-assets-and-exemptions/#Collectables
A collectable is subject to CGT unless:
- you acquired the collectable for $500 or less
- you acquired a share in the collectable for $500 or less before 16 December 1995
- you acquired a share in the collectable when the collectable had a market value of $500 or less.
Collectables include:
- artwork
- jewellery
- antiques
- coins or medallions
- rare folios, manuscripts or books
- postage stamps or first day covers.
If you make a capital loss on a collectable you can only deduct it against capital gains from collectables, not from other capital gains.
If you dispose of collectables individually that would usually be disposed of as a set, they are exempt only if you acquired the set for $500 or less after 16 December 1995.)
2. The only CGT event that has occured is the acquisition of 0.19BTC at a Fair Market Value of $12,300 on 17 August 2021 for my artwork that is CGT exempt, and that 0.19BTC was then disposed of on the 20th August 2021 for $11,300, creating a capital loss of $1,000.
So then in this case, even though I made a gain on the collectable digital artwork , it was exempt due to the collectables CG tax law, I actually made a capital loss due to the final exchange of the tax exempt artwork BTC proceeds worth $12,300 on 17 august to $11,3000 AUD on the 20 August.
Please can someone advise? I feel like I am wrong so any help would be greatly appreciated
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