Bitcoin and the Tax Office

The Australian taxation office is now informing Australian investors with cryptocurrency, of their obligations to pay Capital gains on their investments.

Cryptocurrency is a term used to describe a digital asset which is encrypted.

And by trading or acquiring any of the various encrypted currencies, you are obliged to follow the Tax rules that apply.

To prevent yourself from becoming the next audit Target, make sure to keep all records and data to do with your currency (like holding stocks/ shares). And contact your accountant yo help advice you further.

Due to the popular rise of cryptocurrency like Bitcoin, we are seeing the crackdown of government institutes like the ATO to enforce more audits on investors.

Records and Data you will need for your cryptocurrency transactions.

Date of transactions
Value of the currency (in Australian dollars at the time of purchase)
What the transaction was for
Who the other party was (can be just their crypto address)
Receipts of the purchase or transfer
Exchange records
Digital wallet records and keys
Software costs related to managing your tax affairs

You need to be ware that if you transact crypto from other countries you may be liable to the countries tax rules as well.

General information from the Tax Office for australian tax rules…

Information about transactions from the ATO…

more information about records and data collection…

What types of transactions are being Taxed?

Sell or gift the currency
Trade or exchanging of currency (including swapping of currency)
Converting cryptocurrency to fiat currency, such as Australian Dollars
Using the currency to buy goods or services

Remember that as you make a capital gains on the currency you will be obliged to pay Taxes on some or all the gains,

However Certain gains or losses from disposing of personal assets are disregarded.

Personal asset does not include use as:

Investment
Profitmaking scheme
Course of carrying on a business

The definition for personal asset is:

“Where the cryptocurrency is acquired and held for some time before any such transactions are made, or only a small proportion of the cryptocurrency acquired is used to make such transactions, it is less likely that the cryptocurrency is a personal use asset. In those situations the cryptocurrency is more likely to be held for some other purpose.”

ATO Webstie

If you have previously Exchanged Cryptocurrency the ATO is requesting that you previous tax returns are reviewed to ensure that they are correct.

If you are unsure and wish to be advised on cryptocurrencies then book an appointment with us today!

Geoff Tax Accounting