Crypto TAX RETURN. We can help you prepare for taxation for both SMSF and individual traders and investors.
Record keeping is very important in crypto trading. Start by recording all your trades on both paper on a spread like the one below:
Buy / Sell Code Name Price AUD$ Total Value Units Brokerage excl. GST Other Fee (trading & Withdrawal) Trade Date Settlement Date Exchange
How trading of Crypto Currencies is taxed:
In Australia cryptocurrency is not a form of money/currency for tax purposes. Under existing legislation, cryptocurrency is considered to be a capital asset, and capital gains tax rules apply on the disposal of these assets.
• There are no income tax or CGT implications if you simply pay for goods or services in bitcoin (i.e. for your personal use).
• If you use bitcoin for investment or business purposes, capital gains tax will apply. Proceeds from crypto are considered investment income until it is considered a business.
HOW TO CALCULATE CGT AND DECLARE ON YOUR TAX RETURN:
1. The purchase of $10,000 of cryptos would be considered a personal use asset, and therefore exempt from CGT and no need to declare on your tax return.
2. Purchasing more than $10,000 of cryptos must be declared and the Capital Gains Tax (CGT) added to your tax return.
3. You bought for $50,000 Crypto and sold for $100,000 leaving you with a profit of $50,000.
4. If you have these for more than a year, a 50% discount applies. The profits of $50,000 (with discount) or more than a year- $25,000 is added in your tax return and included to your income and you are taxed at your marginal rate. If your salary is $100,000 gross, your gross income rises to $125,000.
5. The profits of $50,000 (with no discount) then appears in your tax return and included to your income and you are taxed at your marginal rate. If your gross salary is $100,000, your gross income rises to $150,000.
It is vital to keep good records for all your transactions with cryptocurrency, whether you are using cryptocurrency as an investment, for personal use or in business.
The tax treatment of profits or losses on cryptocurrency once it’s sold or used. There is no tax impose on cryptocurrency while it’s held.
Trading & Record Keeping
Transaction record can also be tracked from exchanges like Btcmarkets and Coinspot.You need to keep the following records in relation to your cryptocurrency transactions:
Remember- you pay tax on crypto profits when you dispose the asset.
• the date of the transactions-purchase and sale dates and amounts
• the value of the cryptocurrency in Australian dollars at the time of the transaction (which can be taken from a reputable online exchange)
• what the transaction was for and who the other party was (even if it’s just their cryptocurrency address).
• The sorts of records you should keep include:
• receipts of purchase or transfer of cryptocurrency
• exchange records
• records of agent, accountant and legal costs
• digital wallet records and keys
• software costs related to managing your tax affairs
Keeping good records will make it easier to calculate and meet your tax obligations.
The ATO views bitcoin and other cryptocurrencies as property, not currency, and therefore liable for capital gains tax (CGT) when sold for a profit. If the cryptocurrency is held by an Australian resident taxpayer for more than 12 months before being sold or used, the taxpayer is a cryptocurrency “investor.”
There is a point at which an investor becomes a trader or speculator. The ATO may find the cryptocurrency assets are being held for short-term profit rather than long-term capital growth. In accounting jargon, a person’s tax liabilities will have switched from “capital” to “revenue” account.
Bitcoin and Ethereum are now available in 1200 newsagents across the country and some real estate agents are accepting cryptocurrency.
FOR MORE INFO ATO GUIDELINES FOR CRYPTO TRADING:
https://www.afr.com/news/policy/tax/own-bitcoin-or-other-cryptocurrency-the-ato-is-after-you-20180703-h1265z. By Joanna Mather, AFR. (Jul 6, 2018 )
Tax Calculation in Australia:
If BTC is sold before 12 months so there are no discounts for Capital Gains Tax (CGT). You’re only entitled to a CGT discount when you hold the asset for more than 12 months.
1. Sale: $50,000
2. Purchase: $40,000
3. Profit: $10,000
4. Cost base: $2,000 (expenses)
5. Tax: $8,000
6. Add your net capital gain to the rest of your taxable income.
Completing the tax return:
• Less than 1year- tax paid on $8,000 or add this to your gross income.
• More than 1 year tax paid on $4000 (50% CGT Discount) or add this to your gross income.
• Other expenses in acquiring and preserving the Bitcoin as this will be part of your cost base.
• If you buy/trade cryptocurrency overseas, you’ll need to calculate the value of the cryptocurrency according and then convert this amount into Australian dollars to report it on your tax return.
Deducted your cost base and establish if you’ve made a capital gain or a capital loss. Once you’ve worked out your capital gain or loss:
1. Use your capital loss against an existing capital gain, or carry it forward to a future year. If you carry a capital loss forward, you must apply it to your next available capital gain.
2. Add your capital gain in with the rest of your taxable income. Pay tax on your total taxable income for the year.