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Crypto Information

Cryptocurrency is a digital representation of value that you can transfer, store, or trade electronically. It operates independently of central banks, authorities, or governments. The same tax regulations that apply to asset transactions generally apply to transactions involving crypto assets.

During tax season, the ATO is focusing on cryptocurrency assets. Here’s what taxpayers need to confirm to manage their tax obligations:

  1. Reporting Cryptocurrency Disposal:

    • Exchanging one crypto for another.
    • Trading, selling, or gifting crypto.
    • Converting crypto to a fiat currency, such as Australian dollars (A$).

    Transferring crypto between digital wallets without changing ownership is not considered a disposal and thus not reportable.

  2. Determining Capital Gains and Losses:

    • Capital gain or loss is the difference between the cost base (including purchase price and related expenses) and capital proceeds (value received upon exchange or sale).
  3. Maintaining Records:

    • Taxpayers must keep track of all transactions related to purchasing, holding, and selling Bitcoin for at least five years following disposal.
  4. Additional Considerations:

    • Capital gains or losses from the sale of crypto used for personal purposes may be disregarded.
    • Crypto used for profit-making, investment, or business purposes is not considered for personal use.

    Seek independent professional tax advice to determine capital gain implications, especially in complex tax areas. As the leading CPA accountants in Inner West Sydney, Northern Beaches Belrose, and Adelaide, we’re here to assist.