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Cryptocurrency

Cryptocurrency
Questions about cryptocurrency tax? Read H&R Block's FAQs for answers. If you can't find what you're looking for, call us at 13 23 25 today.
Unfortunately, not. If you buy cryptocurrency as an investment , Capital Gains Tax (CGT) will apply. If you buy and sell cryptocurrency as a trader, income tax will be charged.

This applies regardless of where in the world the cryptocurrency is bought and sold and regardless of the degree of anonymity associated with the sale 
If you are an investor and your sale proceeds are less than your cost base, you will make a capital loss. These losses can be offset against capital gains arising in the same year and to the extent they are not used up, they can be carried forward indefinitely until capital gains arise to absorb them. Capital losses can only be offset against capital gains, they can’t be offset against any other form of income.

If you lose your coins, they are stolen or you are otherwise subject to fraud you may be able to claim the value of your losses as a capital loss.

If you are a trader and you make a loss, this can potentially be offset against any other income arising in the same year (subject to the application of anti-avoidance rules relating to non-commercial losses)
In most cases, no. Some taxpayers mistakenly think that you can buy up to $10,000 of cryptocurrency and avoid CGT by taking advantage of the ‘personal use exemption’.

This exemption only applies where the cost of the cryptocurrency does not exceed $10,000 and you can demonstrate that the cryptocurrency was to fund genuine personal consumption, such as paying for a holiday, a car, your wedding, etc. Mistakenly relying on this exemption is one of the biggest reasons people fall foul of the ATO; expect to be asked to provide proof that you either did – or intended to – use your cryptocurrency to fund personal spending on goods and services.

Where the cost of your cryptocurrency assets exceeds $10,000, the personal use exemption will not be available and CGT will apply, whether the asset was for personal use or not.
See above, basically the same question.
If you invest in cryptocurrency, you pay CGT on each disposal (see above).
If you buy and sell cryptocurrency on a regular basis with a view to making a profit, then the profits on disposal of the cryptocurrency will not be subject to CGT but will be assessable income since you will be regarded as a trader rather than an investor. In effect, you’ll be regarded as being in business as a buyer/seller of cryptocurrency.

It can be a fine line between being an investor and a trader – broadly speaking if you are turning over your cryptocurrency every few days chasing profits, you have many transactions and you are running a business-like structure (with for example a business plan, accounts and records of trading stock, business premises, licences or qualifications, a registered business name and an Australian business number) you will be a trader. If you are holding the cryptocurrency with a view to long term gain, you are likely to be an investor.

If you are a crypto trader, the sales and purchases are converted to AUD$ at the date you receive the proceeds/make the payment. You must also apply the trading stock rules to determine if there is any income or deduction due to the changing value of your trading stock.
Capital Gains Tax (CGT) applies on gains arising from investment in crypto currency .

This is calculated based on the difference between the amount you paid for the cryptocurrency and the amount you disposed of it for. Any profit is subject to CGT, which can potentially be discounted by 50% if you hold your crypto asset for more than 12 months.

Your capital gain is worked out like this:
  • Deduct the cost base from the sale proceeds. The cost base is the price you paid for the cryptocurrency plus incidental costs.
  • Next, take away any capital losses you have.
  • Then discount the gain. Individuals are entitled to a 50% discount. The asset must have been held for 12 months or more for the discount to be available.
  • The resulting figure is your net capital gain. This is subject to tax at your marginal rate.
Disposal occurs when:
  1. selling cryptocurrency for Australian dollars
  2. exchanging one cryptocurrency for another
  3. gifting cryptocurrency
  4. trading cryptocurrency
  5. using cryptocurrency to pay for goods or services
In some cases, such as when you gift it, market value is substituted for proceeds.