Details about Crypto Taxes In Australia

Crypto Taxes In Australia
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There’s a lot of talk about financial coach crypto tax in Australia. With the Australian Taxation Office (ATO) releasing guidance on treating digital currencies for tax purposes, keeping track of what you need to do can be challenging.

This post will break down the four most important things that you need to know about crypto tax in Australia. You can also click here to understand how cryptocurrency works in Australia.

1) Digital Currencies Are Considered Property For Tax Purposes

In Australia, digital currencies are considered property for tax purposes. If you buy, sell, or trade cryptocurrency, you may be subject to capital gains tax (CGT).

If you hold your digital currency as an investment and it appreciates, you will be liable for CGT when you dispose of it. Similarly, if you make a profit from trading cryptocurrency, you will also be subject to CGT.

However, there are some exceptions. You will be subject to GST if you use digital currency to purchase goods or services. And if you mine digital currency, you may be subject to income tax.

2) You Need To Keep Track Of The Cost Basis Of Your Digital Currency Purchases

Whether you are an investor or trader, you need to keep track of the cost basis (what you paid) for each digital currency purchase. It will help you determine your capital gain or loss when you dispose of the digital currency.

If you don’t keep track of your cost basis, the ATO may calculate it for you using the first-in, first-out (FIFO) method. It could result in a larger tax bill than if you had calculated it yourself.

Some easy methods to track cost basis are:

– Use an app like Blockfolio or Delta to calculate and track your cost basis automatically

– Use a spreadsheet to manually keep track of your digital currency purchases, sales, and transfers

– Keep records of all your digital currency transactions, including the date, amount, type of transaction (buy/sell/trade),

3) Capital Gains And Losses On Digital Currencies Must Be Reported

Capital gains are the appreciated value of an asset you own, while capital losses are the decreased value. When it comes to cryptocurrency, if you’ve made a trade and there’s been a change in the worth of the crypto since you bought it, you’ve got a capital gain or loss.

For example, if you bought Bitcoin for $5000 and sold it later for $8000, you’ve made a capital gain of $3000. On the other hand, if you bought Bitcoin for $5000 and it dropped to $4000 when you sold it, you’d have a capital loss of $1000.

Any gains or losses from digital trading currencies are treated as Capital Gains Tax (CGT). The same tax applies to selling other assets like shares or property.

4) If You Use Crypto To Purchase Goods Or Services, The Value At The Time Of Conversion Is Taxable Income

Lastly, if you’re using cryptocurrency to purchase goods or services – perhaps even another cryptocurrency – then the value at the time of conversion is taxable income. You’ll need to calculate the Australian dollar value of your crypto at the time of transaction and include this in your assessable income.

Final Thoughts

Crypto tax in Australia is a bit of a tricky subject. There are still a lot of unanswered questions, and the legislation is constantly changing. This article was a brief guide to help you to minimize your tax burden and maximize your profits.

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