ith the extraordinary growth of cryptocurrencies and the Blockchain ecosystem in Australia over the past years, we at Cryptotax are reaching out to the community to help you understand the current view that the Australian Taxation Office (ATO) has on cryptocurrencies, and to ensure investment structures are established to best suit your needs.
Our dedicated team is led by Partner-in-Charge, Andrew Bragg, operating from RJSanderson at Suite 1/128 Jolimont Rd, East Melbourne as well as the Mornington Peninsula office. Andrew is recognised as a technically astute and perceptive practitioner, who delivers tailored, practical outcomes to his clients. He works closely with his clients to quickly gain a thorough understanding of their complete tax position, and provides solutions that are technically sound, practical and commercial. He is a regular expert commentator and presenter on cryptocurrency tax issues, and a member of the commentary panel at the Blockchain Centre.
This site is designed to provide the community with a greater understanding of their taxation obligations in Australia and the benefits that maybe derived in structuring their investments differently.
There’s a saying that many cryptocurrency investors may have already heard: “Don’t let the tax tail wag the investment dog”. In other words, the best advice for your cryptocurrency portfolio is to base your decisions on investment merit, not on trying to save tax. Even so, there are taxation consequences for everyone with a crypto investment portfolio, so when a ‘grass is greener’ tax option seems possible, it can be very tempting to chase after it.
If you receive bitcoin for goods or services you provide as part of your business, you will need to record the value in Australian dollars as part of your ordinary income. This is the same process as receiving non-cash consideration under a barter transaction. The value in Australian dollars will be the fair market value which can be obtained from a reputable bitcoin exchange, for example.
Where you are carrying on a business and purchase business items using bitcoin (including trading stock) you are entitled to a deduction based on the arm’s length value of the item acquiredThere’s a saying that many cryptocurrency investors may have already heard: “Don’t let the tax tail wag the investment dog”. In other words, the best advice for your cryptocurrency portfolio is to base your decisions on investment merit, not on trying to save tax. Even so, there are taxation consequences for everyone with a crypto investment portfolio, so when a ‘grass is greener’ tax option seems possible, it can be very tempting to chase after it.
Personal Use Asset
An individual using a cryptocurrency is defined as someone who originally purchased the cryptocurrency as a way to buy goods and services for their own personal consumption.
With some guidelines provided by the Australian Taxation Office you won’t be subject to income tax for any increase on the value of the cryptocurrency.
The goal of a trader is the frequent buying and selling of investment instruments with a goal of generating returns that outperform buy-and-hold investing. This differs from Investors who purchase the investment instruments to hold for longer periods.
If you are mining cryptocurrencies, any profit you make should be included in your assessable income. This is on the basis that the ATO considers you to be carrying on a business.
The goal of investors is to gradually build wealth over an extended period of time through the buying and holding of a portfolio of investment instruments.
Although both investors and traders are seeking profits through market participation, generally investors seek larger returns over an extended period via buying and holding investments whereas traders take advantage of both rising and falling markets to enter/exit positions over a shorter timeframe.
Once you have decided to invest in cryptocurrencies, the most important decision you will make is, what structure should I invest or do business in?