Cryptocurrencies have become increasingly popular over the last few years and are continuing to do so. In 2019 the ATO estimated that between 500,000 and 1 million Australians were investing in Crypto. The Crypto landscape has changed significantly since then with the astronomical rise and crash of several coins. As of April 2022, an estimated 5 per cent of Australia’s adult population invest in Cryptocurrency, with 1 in 10 aged 18 to 35 owning some form of Crypto.
Despite the number of Crypto investors in Australia alone, there is limited information available from the ATO regarding the potential tax consequences. It is therefore important to consult with a tax professional with a comprehensive understanding of the Crypto space. They will be in the best position to apply the appropriate tax laws and ensure you do not fall prey to the several misconceptions surrounding Cryptocurrency and how they are taxed.
Is it important to know the tax consequences?
In short, yes. The ATO is very interested in Australian Crypto activity and has been paying particular attention to Crypto capital gains and losses in tax returns for some time.
What are the tax consequences for Cryptocurrencies?
It is a myth that Cryptocurrencies such as bitcoin are tax-free. If you were to buy Cryptocurrency and later look to sell this for a profitable amount, the “profit” from this sale would likely fall under and be treated as a capital gain. You would be required to pay tax on the capital gain at your marginal rate. You may be eligible for a 50% discount on the capital gain if you held the cryptocurrency for longer than 12 months.
This scenario is just one of many possible tax implications. If you are a regular trader and mining for coins, this may indicate to the ATO that you are in the business of trading Crypto, thereby possibly changing the way you are taxed.
Remember, the ATO receives trading data from all Crypto trading houses including overseas, so there is no hiding from declaring any profit received from trading Cryptocurrency.
Is it important to know the tax consequences?
In short, yes. The ATO is very interested in Australian Crypto activity and has been paying particular attention to Crypto capital gains and losses in tax returns for some time.
What are the tax consequences for Cryptocurrencies?
It is a myth that Cryptocurrencies such as bitcoin are tax-free. If you were to buy Cryptocurrency and later look to sell this for a profitable amount, the “profit” from this sale would likely fall under and be treated as a capital gain. You would be required to pay tax on the capital gain at your marginal rate. You may be eligible for a 50% discount on the capital gain if you held the cryptocurrency for longer than 12 months.
This scenario is just one of many possible tax implications. If you are a regular trader and mining for coins, this may indicate to the ATO that you are in the business of trading Crypto, thereby possibly changing the way you are taxed.
Remember, the ATO receives trading data from all Crypto trading houses including overseas, so there is no hiding from declaring any profit received from trading Cryptocurrency.
Our Crypto Tax Services
Cryptocurrency reporting
- Preparation Crypto transaction reports.
Cryptocurrency record keeping
- We can provide secure and simple Crypto record keeping, allowing for smooth tax preparation in future years.
Cryptocurrency tax returns
- Preparation and lodgement of your tax return which includes Cryptocurrency portfolio reconciliations.
Our Crypto Tax Services
Cryptocurrency reporting
- Preparation Crypto transaction reports.
Cryptocurrency record keeping
- We can provide secure and simple Crypto record keeping, allowing for smooth tax preparation in future years.
Cryptocurrency tax returns
- Preparation and lodgement of your tax return which includes Cryptocurrency portfolio reconciliations.
Due to the complex nature of Crypto tax in Australia, we have ensured that our team are up to date with all the latest tax implications of Crypto knowledge so that our clients can receive specialised information which is tailored to their individual circumstances.
We recommend always doing your research on how owning Cryptocurrency in Australia can impact your tax position. If you require further advice regarding Crypto tax, please get in touch.