Hopped on the crypto train? Join the club. Just know that with big gains comes big tax responsibilities.
As of 2022, more than 1 million Aussies now own some cryptocurrency.
And while crypto is going through a long winter right now, there are still some people who have made big gains. And when you’ve made big gains, the tax man and woman is juuuuuust around the corner.
So if you’ve bought crypto with the intention of making a profit through a big juicy crypto sale - then it’s likely you’ll need to pay capital gains tax on it.
Yup, you read that right! A capital gains tax (CGT) ‘event’ occurs when you dispose of your cryptocurrency. That’s a fancy way of saying when you:
So, come tax time, the Australian Taxation Office (ATO) will wanna know all about your crypto transactions.
Cryptocurrency is generally treated like any other asset (i.e. shares or property). That means to work out your capital gain or loss, you’ll need to:
The formula then is:
So let’s say you purchased 1 bitcoin for $10,000 (+$20 in brokerage fees) in March 2020 and then you sold it 12 months later for $78,200. The formula would be:
If you’ve made a capital gain, you’ll need to report it in your tax return. If you’ve made a capital loss, you can use it to reduce a capital gain you make in a later year.
The capital gains will form part of the tax paid on your assessable income.
A big, fat YES to this.
You’ll need to keep records for all your crypto transactions. That’s any record of buying, holding or disposing of your crypto. And, you need to keep records for five whole years after you dispose of your crypto.
Records mean any documents that show:
You’ll also need records of:
All information contained in the Flux app is for education and entertainment purposes only. It is not intended as a substitute for professional financial, legal or tax advice. While we do our best to provide accurate information on the podcast, we accept no responsibility for any inaccuracies that may be communicated.
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