The development of digital currency, also known as ‘cryptocurrency’ (e.g., Bitcoin) has created significant taxation challenges for local and international legislation, until now these currencies operate outside the jurisdiction of governments but can be used to purchase goods and services.
Including NFTs (non-fungible tokens), crypto asset generates from transfer, store, and trade electronically, are digital representation of value. The transfer of a bitcoin was a taxable supply provided the requirements of s. 9-5 were satisfied. effective from 1 July 2017, to treat digital currencies the same as the supply of money for GST purposes. Under s. 9-10(4), the supply of money is not a supply for GST because it is only treated as the device used to exchange for goods or services. As a result, the use of Bitcoin to purchase goods and services is (from 1 July 2017) treated the same as the use of money and will no longer be a separate taxable supply as it was prior to these amendments. Buying, selling, or disposing of crypto assets in any other way, all dealing with it have tax responsibilities.
You must keep records of all transactions at least 5 years.
Report disposal of any crypto when you submit your tax return, including exchange one crypto asset for another, trade, sell, gift or donate crypto assets, convert crypto to a fiat currency (a currency established by government regulation or law) – for example, to Australian dollars. However, transferring crypto assets from one digital wallet to another digital wallet is not considered as a disposal as long as you maintain ownership of it.
In the process of doing any of the above activities if you spend money on fees, charges, other expenses may have capital gain consequences. Contact us if you are not sure. We can assist you determining cost base of asset and capital proceeds to determine exact amount of capital gain or loss. Multi-national currency gain and loss also subject to consideration when we calculate net gain and loss, along with other tax discounts to enjoy. On gain you pay tax. But when you incur a loss, then can’t adjust to your salary or wages, but you can carry it forward and deduct it from capital gains in future years.
Costs or records related to buying is receipts of transactions, documents that display the crypto asset, the purchase price in Australian dollars, the date and time of the transaction & what the transaction was for. Commission or brokerage fees on the purchase, agent, accountant, and legal costs etc.
When owning/holding you may have software costs related to managing your tax affairs, digital wallet records and keys, documents that show the date and quantity of crypto assets received via staking or airdrop.
At time of Selling or disposing receipts of sale or transfer, documents that display, the crypto asset, the sale or transfer price in Australian dollars, the date and time of the transaction, what the transaction was for, commission or brokerage fees on the sale or transfer, exchange records and calculation of capital gain or capital loss.
Btax will come with detailed calculations and examples soon. By time you may request a 1-to-1 appointment in our CBD office International Tower 1, Level 35, 100 Barangaroo Avenue Sydney 2000 or contact us on 0412342734. Our Expert Team can also help with:
Share buy and sale related taxation issues,
Investment property related tax implications,
Changing Australian payroll & future challenges,
Complex business structure,
Sole traders and partnerships,
Company, Trust, and self-managed super funds.
Multi-national entities operating in and out of Australia.