The information provided in this article is general information only and not to be construed as tax, legal, or financial advice. Please seek professional advice to find out if this information applies to you.
All You Need to Know About Crypto Taxes in Australia
It is tax season again and the ATO just started sending out 350,000 letters warning people about their crypto tax obligations. A lot of people are confused about what is going on and whether or not they have crypto taxes due.
Is Bitcoin taxed?
If you are an individual and dispose of cryptocurrency, this is usually considered a tax event. To calculate your capital gains you can take the cost of the Bitcoin in AUD at time of purchase, and subtract that from the proceeds you made at the time of sale in order to calculate your profit or loss. Example:
- Sally buys 2 BTC on Monday for $5,000 each
- Sally sells 1 BTC on Wednesday for $6,000
- Sally records a gain of $1,000 and still has 1 BTC left in her wallet
What if I traded Bitcoin for another cryptocurrency?
If you traded cryptocurrencies, that is considered a disposal by the ATO as stated here “ A disposal can occur when you … trade or exchange cryptocurrency (including the disposal of one cryptocurrency for another cryptocurrency)”. You can read more about how cryptocurrencies are taxed on this crypto tax guide.
What if I used Bitcoin for personal use?
The ATO says here that: “Some capital gains or losses that arise from the disposal of a cryptocurrency that is a personal use asset may be disregarded. Cryptocurrency is a personal use asset if it is kept or used mainly to purchase items for personal use or consumption.” BUT they also say: “Cryptocurrency is not a personal use asset if it is kept or used mainly: as an investment; in a profit-making scheme; or in the course of carrying on a business.” The important point is the personal use asset class does not apply if Bitcoin has been used as an investment. If you have made any gains from Bitcoin while holding it before using it as a personal asset, those gains will probably be taxable. You need to check with a tax agent if you can claim on the personal use rule.
But I thought Bitcoin was meant to be a currency?
The ATO guideline considers Bitcoin to be an asset rather than a currency in most circumstances because people buy and hold. Even with foreign currencies, there is no tax-free forex trading in Australia.
I thought Bitcoin was anonymous. How will the ATO even find out?
The ATO is “seeking to obtain data relating to cryptocurrency transactions from cryptocurrency designated service providers (DSP’s). The data obtained will be used to identify the buyers and sellers of crypto-assets and quantify the related transactions”. When you transact on the Bitcoin blockchain, those transactions are publicly available. Services such as Chainalysis have built software that analyzes these transactions and can be used to identify people avoiding taxes. More can be read on the ATO website here.
Okay, so I have some taxes to pay. What do I need to do?
The ATO requires you to keep some very specific records that can be found here. Importantly, every transaction requires you to record “the value of the cryptocurrency in Australian dollars at the time of the transaction”. This means that if you sold BTC for some alt-coin on a foreign exchange, you need to somehow record this transaction in AUD at the time of sale. Once you have these records ready you can calculate your capital gains and send all this information to your accountant.
This sounds like a nightmare. How can I manage my crypto taxes?
If you are like most people, you probably started using Bitcoin a few years ago and might have hundreds or even thousands of transactions to record. Fortunately, you can use Crypto Tax Calculator to import all your transaction history and help categorise everything. We have partnered with CryptoTaxCalculator to offer a 20% discount code for all users. Their yearly subscription covers all previous financial years, so if you need to amend your tax return they have you covered. Simply follow these steps to import your wallet information and get on top of your crypto tax return.
- Follow the steps to import your wallet information here
- Select the investor plan and enter BITCOINAU_TAX at checkout to get a 20% discount off your first year.
About the Guest Author
Shane Brunette is the founder of CryptoTaxCalculator – Australian made crypto tax software that helps you automate your cryptocurrency tax return. ***
Disclaimer: The opinions expressed in this article are those of the guest author. They do not necessarily reflect the opinions or views of Bitcoin.com.au
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Tamara is a marketing and PR professional, enthusiastic about crypto, blockchain and technology in general. She has been a part of Bitcoin.com.au’s remote team since 2015. For the past 5 years, together with the Australian team, she has been working on various marketing and PR efforts. Her focus has mostly been on digital marketing, content marketing and social media. Click here to view Tamara’s full bio.