With tax time just around the corner, the ATO has reminded Australian crypto-enthusiasts of their responsibilities under the tax law. Essentially, crypto is considered an investment in Australia, just like shares, and any profits attracts Capital Gains Tax (CGT). CGT is pretty hefty so expect your profits to be eaten away by the taxman!
As crypto underwent such a huge 'growth-spurt' this financial year, particularly in December, the tax office will be keeping an eye on any unusual fiat deposits from know crypto exchanges.
The exception to this rule is if the cryptocurrency is used to pay for goods and services. Currently the town of 1770 in Queensland is opening up to accepting a variety of cryptocurrencies, and these types of transactions do not attract CGT. Assumedly, this is because you are paying for goods and services and therefore stimulating the economy through your profits. So the question is then, should I use my crypto profits to pay for bills or other goods to avoid CGT?
Apparently this is ok up to $10,000 per financial year and then CGT comes into play. Cashing any cryptocurrency back into fiat/cash will attract CGT.
The tax laws in Australia are very complex and as crypto is a relatively new revenue stream for people, there still seems to be a certain level of confusion when it comes to the tax law that surrounds the 'Magical Internet Money'!
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Move to Panama. It's the easiest way.
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Or selling your body for a loss....... Actually that is very easy for me!
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Yeah, but that would be classed as income, not capital gains. So you wouldn't be able to offset any crypto/regular gains with it.
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"...the ATO has reminded Australian crypto-enthusiasts of their responsibilities under the tax law."
Got a link?
The previous ATO "guidance" was vague and ambiguous so I am interested in any change or clarification. The way I am approaching this FY is to consider just the Fiat/Crypto gateway and making sure I'm not pulling a net gain back to fiat.
It's a concern and I'll talk to my tax guy about it (again) but he and everyone else I've talked to seems clueless.
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https://www.ato.gov.au/general/gen/tax-treatment-of-crypto-currencies-in-australia---specifically-bitcoin/
Not very recently updated though.
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I have a friend who works for the ATO who monitors cryptocurrency transfers and she monitors anything over $10,000. The documentation I have read is fairly ambiguous as well but I think if you trade into Fiat, to avoid CGT you need to prove the amount invested in.
I was also thinking that earning $$$ through blogging is an income so therefore there would be deductions if you had an ABN.
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Except, as per ATO guidance, when you pay for something in crypto you are assumed to have obtained a capital gain, based on the fiat value of the goods.
You obtain $200AUD worth of Steem. It doubles. You decide to buy a Nintendo Switch, in Steem. You've made a capital gain by exhanging that Steem for the Nintendo Switch, and now have an additional income tax burden of $200, calculated at your marginal rate.
Don't forget, taxation is theft.
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I read the rules a little differently.
For those that have put in less than $10K Fiat to buy Crypto for "personal use" then CGT doesn't apply. Even if you had sold at the peak in Dec/Jan for $100K then there is no CGT.
The problem comes if you are trading, then you can't say its personal use, as you are actively trying to make additional profits.
Similarly, cashing out coins that have no "personal use" function would make it very hard to justify personal use.
But you're completely correct, it is confusing as hell and would be easy to screw it up. It you can get the fiat into accounts that aren't your own, you'll have a much better chance of not copping any ATO scrutiny. Pre-paying bills and paying for things like School fees etc are perfect for this.
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Yeah. It is totally confusing and I think there will be a lot of different opinions until the ATO starts pursuing some test cases.
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I think for this financial year the ATO is going to be a little more lenient on cryptocurrency gains because it's such a confusing and emerging form of investment. I work in the fintech industry providing tools for accountants and there is a lot of confusion out there, a lot of accountants don't even know what the rules are because although the ATO did put out advice, it wasn't clear-cut.
Expect the next financial year to be a little more clear as the ATO clarifies and refines its rules. But if you made a profit and didn't report it, and the ATO finds out, you'll get the benefit of the doubt, but still be expected to pay it back. You won't be fined because you could argue legitimate confusion (not even accountants have this nailed down), but I doubt anyone caught not reporting crypto gains will get away with not paying CGT if the ATO finds out.
A lot of people are about to get burned by crypto, that's for sure. Given how flat the markets are at the moment and sentiment, those who spent their gains probably have no fiat to even pay tax with anymore.
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If government gain taxes from crypto investors then they should also refund if an investor loses money because of bear market 😁
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You can carry forward capital losses and offset them against future capital gains.
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Taxes are bad for a person.
But are good to a society.
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Taxes are bad for
A person. But are good to
A society.
- tsnaks
I'm a bot. I detect haiku.
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While cute, this superfluous comment is considered to be spam, harms the blockchain, and is the reason why we will soon have to pay for comments like this with Resource Credits. The servers that maintain the blockchain are extremely expensive because of comments like this seeking low effort upvotes, so please do not reward this behavior.
Please consider using this link to give a small downvote of 15% or so to discourage these comments.
Any bot like this should respect the community by providing a whitelist to prevent the post in the first place and then provide a way to delete the comment for those who find this intrusive.
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I hope this goes for the haikubot not my comment :/
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Yes, my comment is in reply to @haikubot and does not reflect your account in any way, my apologies!
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no problem :)
Just my misunderstanding
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haha this is funny that you think that this is a haiku :D
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bitcoin forever )
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This sounds like a much to all crypto enthusiast in Australia.
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