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ATO Community

Re: Does the ATO fully understand the volatility and nature of Bitcoin and other cryptocurrencies?

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The ATO states that every crypto-to-crypto trade is taxable. This is utterly absurd and is such a money-grab. Every person involved in crypto would side that it would be easier for both parties if a taxable event only occurs when it is transitioned back into AUD.

Why should a decentralised currency be taxed? The ATO takes no risk and it's the trader that takes the fall when the asset goes volatile. 

My accountant calculated my capital gains, just from trading alone and i've accrued over $200'000 in tax debt.

The sad thing is that a lot of traders won't even know what they're getting into.

What's worse? The market has crashed in recent months and what I have in debt doesn't change.

I've read Community Manager AmandaE's explanations:


Using your example: 

  • If your total cost base was $50,000, you take this away from $1,000,000 for a capital gain of $950,000. 
  • If you held your cryptocurrency for more than 12 months, you apply a CGT discount of 50% = $475,000 net capital gain
  • Add your net capital gain to the rest of your taxable income - let’s say your total taxable income for the year was $97,663 because you had some deductible expenses. $475,000 + $97,663 = $572,663. 
  • Apply tax at the relevant marginal rate. If you earn more than $180,001 for the year, you pay $54,097 in tax + 45c for each dollar over $180,000 = $230,795 tax payable."

 the above is similar to my situation but how am I supposed to pay this when the  market is bloody down.

and then there's the issue if I want to cash out that crypto to AUD to pay my taxes, i trigger another taxable event!

I want to be by the book but this is a very greedy play.

So my question is how does the ATO plan to solve this problem when the tax owing is larger than the value of the portfolio itself? Someone didn't think this through! 



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You're assuming they are not intentionally being malicious with these tax laws. They made up em as they went along. One person here said he was told on the phone that it was cash-in cash out accounting prior to EOFY 2017. Now they clarified their stance in the middle of the financial year and went with the most aggressive tax structure possible. You think they would ever do that to business or property investors? 

Expect ATO silence and apologists here...


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in simple terms... the cash in cash out could only explain how your AUD became AUD + or - X.
if they want to see how your cash became crypto and crypto became crypto + or - X... then they need to see it as capital gains.

'triggering a tax event' doesn't mean every trade is taxed, it means the capital gain is recorded at the time of disposal of one crypto to another, meaning you have records of your progress as a trader.

the final trades for what you're holding determine your costbase, but also the value of what you disposed of at that time... your tax will only ever be applied to your capital gain... so a 'tax event' means this information is vital to figuring out your capital gain.

as in .. the gain in AUD, but also the changing of crypto from one type and amount to others. 

The ATO is basically saying, it is relevant to them to know not only how 100 AUD became 200 AUD, but also how 1LTC became 20EOS. Just for the sake of fact checking that your 100 AUD didn't become 200 AUD via any kind of illegal means, and purely through trading which you can backup with evidence.

So... if you sold... all your crypto before EOFY, this would cement into place your new value (from the crash) then you could buy it back immediately.. end of 2017 or beginning of 2018 it wouldn't matter, because that tax event would show little change in capital gains... but the sell of assets bought in January, just before the EOFY would show as you say... a huge change... a big enough change to take people from reporting a gain to the loss that is more realistic to their finanicial situation.

If everyone knew the ATO was taxing capital gains in this way, then yes people could have sold out and bought in quickly anytime in June, then this would have reported the progress of their Capital Gains more accurately. All that would have cost every user.. would be the fees for selling and rebuying (same price)... but that fee would then have been a deduction so... 

Put it this way it sounds like you're worried a new tax amount it being applied to every crypto to crypto trade... it isn't... you'l be paying the same tax... no matter if you figure out your capital gains by seeing how much you spent in AUD and how much AUD you have now in the value of your crypto at costbase (disposal of what got it to you)... that you would have by including every single trade back and forth along the way.

What AUD you had and what asset+AUD you have now.. IS your capital gain. Unfortunately for us, the ATO wants a level of information that it isn't possible to provide from every exchange (albeit we can from most).. which is all the trades inbetween...
this again I stress doesn't change your tax/capital gain, it just changes how precisely you describe your business of trading.

Yet... if you ARE actually a business.. not an investor... this bit confuses me... I don't think you use Capital Gain... in this method, but by evaluating your held crypto as trading stock which you gain the value of in several different ways.. such as EOFY evaluation of what you hold, not the costbase (aka tax on what you last disposed of as capital gain evaluation). 

I think you can use 'trading stock' method if you have an ABN for your trading. I'm still confused though, but yeah.
My point is... 'every trade is taxed' is the same as saying 'captial gain is taxed'... it is the same as saying 'crypto is an asset'.... and you knowing that tax then applied via CGT. Your capital gain is evident by every trade you made leading up to what you have now...

They say 'you don't need to tell us the value of what you have now, we only care what you last disposed of'... because what you last disposed of gives the cost base and thus value of everything you have now... your capital assets, evaluation.. compared to your spending.. = capital gain.. and thus added to your income determines your taxable income increase.



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In short ... in your case 'triggering ANOTHER' event is what you needed... it isn't 'additional TAX' it is just updating your Capital Asset value and thus your Capital Gain, to a time closer to the present by disposing of your crypto for another crypto (updating your costbase + profit). 'Event' means record... Capital Gain means TAX will be applied.



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The type of trading you're suggesting is technically not allowed by ATO. They specifically say they will ignore CGT events that were triggered to minimise taxes. So selling and rebuying soon after around EOFY would not help you. Face it, they are trying to financial ruin people. 



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Were you warned by the supplier of the trading platform that trading could lead to tax obligations? If not you might find a no win no pay lawyer who might be interested in having a go in this new area?

I trust you are not sitting now on an gain less than $200k?


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9k, but doing the right thing shouldn't just apply to mega rich cheese noshing quinoa connoisseurs, I just need enough profit left to get some smashed avo, i'm an art student, I can collect dust off the floor, pile it up into a mound that looks like **bleep**, name it after some despised **bleep** (lol p o l i t i c i a n < is a censored word :') and sell it for billions of  monopoly money. why do I need this pleb cash noose?