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CRYPTO TAX AUSTRALIA

HOW IS CRYPTOCURRENCY TAXED?

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THE ATO'S

TAX TREATMENT OF CRYPTOCURRENCY.

Cryptocurrency is treated as an asset like shares, properties, ETFs etc and attracts Capital Gains Tax and Income Tax. Our cryptocurrency tax accountant can help you with crypto tax advice, prepare and lodge your cryptocurrency taxes.

With the ATO’s Crypto crackdown in place as the taxman locked in a data-matching system, it’s important that you know the tax obligations of your crypto trading.

Want to start a cryptocurrency tax return?
there isn't a game of hiding and seek.

HOW WILL THE ATO KNOW ABOUT YOUR CRYPTOCURRENCY DATA?

The ATO collects data on cryptocurrency transactions and account information with cryptocurrency Designated Service Provider (‘DSPs’) such as coinbase, coinjar, swyftx etc. Wonder how? it is because:

Data Matching Program.


The ATO has a Data-Matching Program with all Wallets, Exchanges and Brokers.

Knows Details of your Buy & Sell.


The ATO knows who and how much cryptocurrency they acquired &/or Sold as far back as 2014.

Knows your Wallet Information.


The ATO Knows Your Customer (KYC) Information when you sign up with any Wallets / Exchanges.

HOW DOES CRYPTOCURRENCY GET TAXED?

The ATO does not see cryptocurrency as Australian or foreign currency. They are considered as assets for Income Tax or Capital Gains Tax Purposes. The diagram below shows how cryptocurrency is taxed depending on:

i. Whether you held crypto as an:

Investor

An investor is someone who buys cryptocurrencies in a company to grow their investment over time. In a nutshell, someone who hold assets for longer than 12 months. Investors can access the 50% Capital Gains Discount.

Trader

A trader is someone who buys and sells cryptocurrencies quickly to try and profit from price changes. E.g., for someone who holds assets for less than 12 months, any profit a trader make is taxed at your legal structure's marginal tax rates and doesn't have access to the 50% Capital Gains Discount. ​

Miner

If you are mining cryptocurrency, any profit you make should be converted into AUD and included in your assessable income. This is on the basis that the ATO considers you to be carrying on a business.

Business Owner

If you accept cryptocurrencies as payment for goods or services provided as part of your business, you will need to convert and record:
- crypto sales income in AUD at fair market value (assessable income).
- business expenses in AUD at fair market value. Business expenses are tax-deductible provided that it was acquired at arm's length value.

Also, capital gains tax events may arise if you sell your business' cryptocurrencies; however, the capital gain is to be reduced by the AUD value originally recorded as assessable income, therefore, you'll not be taxed twice.

Personal Use Asset

A personal use asset (such as a car, boat or painting) is exempt from CGT if it costs less than $10,000. The ATO will accept that cryptocurrency is a personal use asset if you can demonstrate that you acquired it purely to hold and then exchange for other goods and services, and not with the ‘intention’ of making a profit or in the course of carrying on a business, although the question of ‘intention’ can be quite subjective and is not always so easy to prove.

ii. Whether you made a Profit or Loss.

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Profit

Profit is a financial benefit that is realised when the amount of revenue gained from the sale exceeds the cost of cryptocurrencies, brokerage and finance expenses.
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Loss

A Loss is when you sell for less than you originally paid for the cryptocurrencies

iii. Taxation of cryptocurrency based on your 'Legal Structure':

Legal StructureINVESTORTRADERTAX RATES
Individual 50% Discount - Individual Pay at Marginal Tax Rate
Sole Trader 50% Discount - Sole Traders Pay at Marginal Tax Rate
Trust 50% Discount - In the hands of beneficiaries ONLY - Beneficiary(s) Pay at Marginal Tax Rate
Partnership 50% Discount - In the hands of partner(s) ONLY - Partner(s) Pay at Marginal Tax Rate
Company: Turnover Not Qualified for 50% Discount - Flat at 27.50% on Taxable Income
Company: Turnover >$10m Not Qualified for 50% Discount - Flat at 30.00% on Taxable Income
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ARE CRYPTO DONATIONS TAX DEDUCTIBLE?

YES! IT PAYS TO BE KIND

Donating cryptocurrency to Registered Charity Organisations and Deductible Gifts Recipients is a tax-free event and is tax deductible. To calculate your deduction, you need to perform a capital gain or loss calculation based on $AUD price on Purchase and Donation date.  However, your tax deduction will be equal to the fair market value of the donated cryptocurrency on Donation Date.

Contact us if you are looking for:
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Australian taxation of cryptocurrency depends on your ‘Legal Structure’.
Tax treatment of cryptocurrency