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- Taxation of Cryptocurrency in Australia - GFA Strategic AccountantsGFA Strategic Accountants
- Taxation of Cryptocurrency in Australia
- PKF Australia
An example of where bitcoin would be considered to be a personal use asset is where an individual taxpayer purchased bitcoin from a Bitcoin exchange and uses the bitcoin to make online purchases for their personal needs, for example, clothing or music. If the bitcoin were instead purchased to facilitate the purchase of income producing investments, they would not be personal use assets.
Another example of where bitcoin would not be a personal use asset is where an individual taxpayer mines bitcoin and keeps that bitcoin for a number of years with the intention of selling them at opportune times based on favourable rates of exchange. If you buy and sell bitcoins in a form of business e.
The proceeds you derive from the sale of bitcoin are included in your assessable income. Any expenses incurred in respect to the exchange service, including the acquisition of bitcoin for sale, are allowed as a deduction. In this case, bitcoin is considered as trading stock. You are required to bring to account any bitcoin on hand at the end of each income year. Similar to other types of business, trading car, goods or shares , based on your circumstances, you may be considered as a Small Business Entity SBE and able to take advantage of the SBE tax concessions.
Taxation of Cryptocurrency in Australia - GFA Strategic AccountantsGFA Strategic Accountants
If the profit was made through a company or trust, the profit could be taxed under the trading entity or distributed to beneficiaries who may have a lower marginal tax rate. GST is payable on the supply of bitcoin made in the course or furtherance of your enterprise. GST is calculated on the market value of the goods or services. This is ordinarily equal to the fair market value of the bitcoin at the time of the transaction.
Where you are in the business of mining bitcoin, any income that you derive from the transfer of the mined bitcoin to a third party would be included in your assessable income.
Taxation of Cryptocurrency in Australia
Any expenses incurred in respect to the mining activity would be allowed as a deduction. Losses you make from the mining activity may also be subject to the non-commercial loss provisions. Bitcoin held by a taxpayer carrying on a business of mining and selling bitcoin, will be considered to be trading stock.
GST is payable on the supply of bitcoin made in the course or furtherance of your bitcoin mining enterprise. Input tax credits may be available for acquisitions made in carrying on your bitcoin mining enterprise. These records include receipts, exchange records, digital wallet records, records of agent, accountant and legal costs, and software costs. Investors are wise to invest in cryptocurrency with care, as its tax treatment might have broader consequences to your financial position.
If you require tax advice before making the plunge into cryptocurrency or need help with your existing cryptocurrency investments, LDB has trusted experts who can help. To find out more, call us on 03 or fill out the form below to arrange a discussion with Florence Ioannou, our cryptocurrency tax specialist.
ATO announces cryptocurrency data matching program. How is cryptocurrency, like Bitcoin, treated for income tax in Australia? Taxation on cryptocurrency in self-managed super funds SMSFs.
PKF Australia
How changes to GST affects Bitcoin and other cryptocurrency. This article should not be used as a substitute for competent professional advice from a suitably qualified professional and, as such, we advise you seek professional advice to obtain an accurate assessment. This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. You alone are solely responsible for determining whether any investment, asset or strategy or any other product or service, is appropriate or suitable for you based on your investment objectives and personal and financial situation.
You should consult a suitably qualified professional regarding your specific legal, tax, financial or investment situation. August 29, Here are the main tax considerations to remember for Australian cryptocurrency owners: How is cryptocurrency taxed in Australia?
Cryptocurrency for personal purposes Buying cryptocurrencies for the longer term for capital growth, mining as a hobby or just casually trading cryptocurrencies are subject to capital gains tax CGT rather than income tax. How to reduce tax related to cryptocurrency Cryptocurrency investors can reduce their tax liabilities through the CGT discount and the personal use asset exemption, however there are strict conditions to follow.
What happens to lost or stolen cryptocurrency? In order to claim a capital loss on a lost private key, the ATO will need the following evidence: when you acquired and lost the private key the wallet address that the private key relates to the cost you incurred to acquire the lost or stolen cryptocurrency the amount of cryptocurrency in the wallet at the time of loss of private key that the wallet was controlled by you for example, transactions linked to your identity that you are in possession of the hardware that stores the wallet transactions to the wallet from a digital currency exchange for which you hold a verified account or is linked to your identity.
What records are needed for tax purposes?
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