Cryptocurrency and Australian Taxes

You’ve likely heard on the news (or let’s face it, through the young ones at the office!) the term Cryptocurrency. You may have even dipped your toe into the digital currency or be a fully fledged investor, but are you up-to-date with what happens come tax time?

We sat down with Director Andrew Catlow to discuss Cryptocurrency in Australia and the Australian tax obligations.

Does the ATO know about my cryptocurrency?

Yes. If you have an account with an Australian Cryptocurrency Designated Service Provider (DSPs), then it’s likely that the ATO already has your data.

How far back does this data date to?

The ATO has a data sharing program with all Australian exchanges, and additionally has crypto transaction data from as far back as 2014.

Furthermore, The ATO has the Know Your Customer (KYC) information you provided when signing up for any Australian exchange or wallet – they essentially know everything you’re doing financially in this space.

How do I know if I am an investor or a trader?

The ATO has different tax rules for individual investors, and for taxpayers who make a regular income from trading. Here’s a short breakdown:

Investor: An investor is just that – an individual investing in a future return. An investor buys and sells crypto as personal investment ‘stock’ with the goal of gradually building wealth over an extended period of time with profit made from long-term capital gains. Most Australian crypto users fall into this category and any profits gained will be subject to Capital Gains Tax. In some cases, Income Tax may also apply – depending on how the crypto was acquired.

Trader: A trader is active in crypto as a means to generate an income and is operating from a business setup. If you’re running a crypto trading, forging, or mining business, regularly buying and selling for short term gains, or running a crypto exchange, the ATO would tax you as Income as a trader.

Are both Investors and Traders required to pay Capital Gains/Income Tax?

Bitcoin and other cryptocurrencies attract both Capital Gains Tax and Income Tax in Australia. Investors can access the 50% Capital Gains Tax Discount, whereas Traders can not.

Have you invested in Cryptocurrency this financial year? Visit us at Moore Lewis & Partners this tax season to discuss your tax options.

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