I’ve purchased and traded cryptocurrency for other people (who funded the purchases) and need to pass the currency back to them at some stage.
I’m hoping to clarify how to transfer ownership so that the currency isn’t considered to be my asset, and the real owner is liable to pay any applicable capital gains tax. As cryptocurrency can be stored almost anonymously I’m concerned that I may have difficulty clearly demonstrating the transfer of cryptocurrency assets leaving a wallet/exchange in my name and going to another person’s. How will you recognise ownership of the currency?
In this situation you’ll need to be able to provide documentation that demonstrates you purchased the cryptocurrency on someone else's behalf, at their request and with their money. This is the same whether the property in question is cryptocurrency, company shares or any other asset.
We recommend at least having a written agreement in place.
If you don't have any such documents that were prepared before or at the time you purchased the cryptocurrency, we suggest you contact our Early Engagement team to discuss your situation, or seek written Advice in a private ruling.
If you can demonstrate that the cryptocurrency was acquired and held for somebody else, transferring the cryptocurrency back to that person (the owner) would not be a CGT event.