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Re: Crypto Currency Tax / Deductions

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Initiate

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Hi ATO,

 

Short version - how do I correctly claim investment costs associated with crypto gains?

 

Long version: 

 

I bought a dedicated computer to be secure for crypto investment purchases / small amount of mining (~$3k) and a few smaller things (hardware wallets valued at ~$100 each). I ultimately bought <$10k of crypto, and slowly sold it off as the price kept going up and it made less and less sense (netting roughly $30k in capital gains, none held for more than 12 months).

 

I have records of all my crypto transactions, receipts for all purchases, and I kept a logs of my use of the dedicated crypto computer (100% used for crypto).

 

Do I just declare the capital gains in the "Other Capital Gains" section of mytax, and claim the depreciation on the computer like any other "required for work" computer?

 

ie, pay the capital gains tax in FY18, and depreciate the computer over the next four financial years from the date of purchase (ie, the next 5 actual financial years - FY18-FY22).

 

Can I claim the small separate purchases under $300 immediately, and depreciate the computer on its own?

 

Thanks!

 

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Devotee

Replies 0

Can I add here this query too?

  • Rollover – If you sell an active asset, you can defer all or part of a capital gain for two years, or longer if you acquire a replacement asset or incur expenditure on making capital improvements to an existing asset.

    How does this apply to cryptocurrency?  Is flipping a coin with intent on making an improvement to the value of existing capital value a thing? 

Taxicorn

Replies 6

Depends on wether you have an abn or not.

With one you can immediately deduct the cost of the computer.

 

Without one you have to depreciate it over 4 years (I presume it is a desktop and not a laptop?)

I am presuming that you do not have an abn therefore claim immediately anything under $300 and depreciate

anything over $300.

 

What do you specifically mean by 'a small amount of mining' 3k?

Do you mean that you mined and received $3,000 in coins?

Have you disposed of this?

 

 

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Initiate

Replies 5

No ABN - so I guess that answers the depreciation question. I meant the pc was $3k - mining wise I basically failed, since I didn't want to join any pools. Only received a few coins, and not valuable ones (I wasn't mining BTC). When calculating the cost basis of mined coins I just assumed them to have zero cost (I sold everything).

Taxicorn

Replies 4

Depreciating the PC will be by business use %, so 100% in the first year and then it needs to be adjusted for the following years.

 

You can't keep receiving a benefit from the PC if you are not using it for a business use.

 

To avoid me repeating myself see my answer here regarding mining https://community.ato.gov.au/t5/Cryptocurrency/Bitcoin-Mining-Do-I-need-an-ABN-and-can-I-still-claim...

 

Initiate

Replies 3

I still plan on using the pc 100% for crypto in future, but I don't see myself mining in FY19 unless the cost/benefit changes. In FY18 I sold all coins as I mined them since I was only mining based off the profitability of that coin - not because I believe it is an asset I would invest in. I still hold coins for investment. I wouldn't do any transactions on crypto from a non-dedicated pc, too much risk - and there are lots of other interesting ways to make money (ICO's, writing software to automate arbitrage between exchanges, buy-and-hold etc).

Devotee

Replies 2

I bought a tablet (lenovo) off gumtree, around 300AUD, so I could trade on the bus on the way to school, or atleast watch my positions and make sure I wasn't hemoraging money throughout the day.

I'd say I 50% use it for android games now and 50% for checking up on crypto... that is a fair assessment... so do I just claim 150AUD as my deduction on this equipment? no abn in my case and this is my first year trading. (EOFY 2017)

Taxicorn

Replies 1

So are you classifying yourself as a Trader?

 

A trader is someone who is trading in and out of cryptocurrency seeking to make a profit from short-term price movements. This includes those taking advantage of price arbitrage across exchanges; those utilizing technical analysis - day/swing traders; bot traders; those flipping ICOs on pump and dumps; etc.

 

If you’re a trader, then broadly speaking this is how you’re taxed:

  • Profit – 100% tax assessable
  • Loss – 100% tax deductible (subject to passing non commercial loss rules)
  • You may also have GST compliance obligations

Initiate

Replies 0

Hmm - Maybe - Is this something that can change year by year? Tax wise it makes no difference to me - I just want to be correct.

 

I don't think so this year (Something like 90% of my profit came from buying ethereum cheaply at the start of the financial year, and selling a few percent every time it doubled). The remainder was a little mining, a few small ICO purchases and trading on volatility (~100 buy-sell transactions total, total 'trading' turnover well under $75k).

 

Next year, maybe - will have to see what opportunities I find, but I doubt I am going to get another ethereum bull run.

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