How are cryptocurrencies taxed in Australia?
The Australian Tax Office (ATO) has released a guide that the treatment of any gains/losses made on cryptocurrencies (such as Bitcoin) are taxed in Australia. Essentially, capital gains tax (CGT) applies to an asset at the time it is sold, traded for another crypto asset or used for a purchase. If you are a professional trader (your main source of income/livelihood consists of trading cryptocurrency) the tax treatment differs. With professional trading, the gains/losses are treated on an income basis and form part of your ordinary income. This means that any losses made can be offset against your other taxable income.
Are there any situations when I won’t be taxed?
Yes, you may be eligible for the personal use asset exemption. Crypto transactions are exempt from CGT if:
- the crypto is used to purchase goods or services for personal use, such as booking hotels online or shopping at retailers that accept digital currency, and
- The capital gains you make are from personal use assets acquired for less than $10,000.
How do I keep track of all of my transactions and calculate my gains/losses?
If you are a light trader, or trading multiple times a day, it is recommended you use a tax reporting tool like Koinly. We strongly recommend using this tool to our clients. This tool automatically keeps track of all transactions in your wallet and calculates your gains and losses on disposal. The great thing about a tool like Koinly is that you are provided with an accurate crypto tax report within twenty minutes of signing up. The report’s figures (i.e. for the 2020 Financial Year) can be inserted into your Income Tax Return with ease. Please use this link to receive a $20 discount upon joining: https://koinly.io/?via=22414B62
When do I report my cryptocurrency gains/losses?
The Australian tax year is from 1 July to 30 June the following year. Crypto gains and losses form part of your income the same way a gain on sale of shares would (pending how much you trade). If you are lodging your own return, it must be lodged by October 31 in the same year that the tax year ended. If you are a part of a Tax Agent’s lodgement list, your lodgement date is extended until early-mid the following year.
What are the things I should take away from this article?
The ATO are all over crypto transactions. Make sure to use Koinly for accurate reporting and calculating of your gains, and Link Advisors to guarantee you are compliant and don’t have to pay too much tax on your crypto profits.