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What is the tax implication of masternode reward or minted coins in cryptocurrency?

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When I purchase masternode cryptocurrency eg PIVX, DASH, I already know the ROI% as we could forecast how much PoS coins I could earn as minted coins or masternode rewards. I would like to know the proper way to file in tax return coming FY.

 

Most masternode coins would decline in value as the coin supply increases in first 3-6 months by emission. Usually investors have to sell all coins they bought and also the reward to recoup the investment. Considered I am investor not trader, I have bought 1,000 CoinX with $5,000. In three month time, I have total 5,000 CoinX(4,000 coins being reward) but its total market value becomes $1000. The new coins that I gain, is it a CGT event that could offset my capital loss when I sell it? or it treats like dividend in stock that I need to realize its AUD value and consider as re-invest into same coins?

 

I have been browsing the ATO community but could not obtain the answer I'm looking for. I would appreciate to hear some though from any experienced members.

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ATO Certified

Devotee

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Hi @WTDream

 

Thanks for your post.

 

Cryptocurrency is considered to be a capital asset, so you need to keep detailed records whenever you acquire a new coin (or asset). A capital gains tax event takes place when you dispose of a capital asset - so whenever you trade, sell or gift a coin. You can make either a gain or a loss when you dispose of your asset. 

 

We have several useful articles on how cryptocurrency is treated for tax purposes - have a look at Confused about tax on cryptocurrency and How do I calculate capital gains tax on cryptocurrencies? to get started. You may also find our Tax treatment of cryptocurrency in Australia guide useful. Let us know if you have more questions! 

 

Thanks. 

1 REPLY 1

Best answer

ATO Certified

Devotee

Replies 0

Hi @WTDream

 

Thanks for your post.

 

Cryptocurrency is considered to be a capital asset, so you need to keep detailed records whenever you acquire a new coin (or asset). A capital gains tax event takes place when you dispose of a capital asset - so whenever you trade, sell or gift a coin. You can make either a gain or a loss when you dispose of your asset. 

 

We have several useful articles on how cryptocurrency is treated for tax purposes - have a look at Confused about tax on cryptocurrency and How do I calculate capital gains tax on cryptocurrencies? to get started. You may also find our Tax treatment of cryptocurrency in Australia guide useful. Let us know if you have more questions! 

 

Thanks. 

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