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If you've bought or sold cryptocurrency in the last financial year, it's vital that you understand your Australian crypto tax obligations.
You need to pay tax on Bitcoin and other cryptocurrencies in Australia, but how you're taxed can vary depending on the type of crypto transaction and your circumstances.
In this guide we look at the basics of cryptocurrency tax in Australia to help you learn what you need to do to keep the Australian Taxation Office (ATO) happy.
The following is a summary of some important details regarding how the ATO handles cryptocurrency at the time of writing (1 June 2023).
While the ATO's guidance on cryptocurrency has remained consistent for some time, it is still an evolving space, and rules and laws may change.
We're not tax experts, and general information such as that found in this guide is no substitute for professional advice. Consider your own situation and circumstances before relying on the information laid out here.
Visit the ATO's guide to cryptocurrencies for more information or contact them directly on 13 28 61.
In most cases, the answer is yes.
Despite its name, cryptocurrency is treated as an asset, rather than currency by the ATO.
This means you have to pay capital gains tax on any profits made when selling cryptocurrency. This is very similar to how stocks are treated for tax purposes.
The good news is that if you have held the same asset for over 12 months without trading it for another, then you may qualify for a 50% discount on your capital gain.
This is just one of a number of ways you may be able to reduce your cryptocurrency tax bill in Australia.
Your tax responsibilities vary depending on whether the ATO classifies you as a crypto investor or trader.
Most people who buy and sell crypto occasionally will fall into the investor category. This means you'll be taxed under capital gains tax (CGT) rules.
But if you buy and sell large quantities of crypto in a business-like manner, the ATO may deem you to be carrying on a crypto trading business. If that's the case, your earnings are classified as business income and subject to income tax.
Check the ATO's Share Investing vs Share Trading guide for more information on whether you're an investor or a trader.
Let's take a look at how each is handled.
In a media release from May 2023, the ATO singled out capital gains from crypto assets as a priority this tax time.
"Don't fall into the trap of thinking we won't notice if you sell an asset for a gain and don't declare it" said assistant commissioner Tim Loh.
The ATO has had a cryptocurrency data-matching program in place since April 2019 and it can track data as far back as 2014.
This program allows the ATO to match its own records with crypto transaction data from exchanges to identify anyone who isn't meeting their Australian crypto tax obligations.
Last financial year Loh reminded taxpayers that "Through our data collection processes, we know that many Aussies are buying, selling or exchanging digital coins and assets so it's important people understand what this means for their tax obligations".
You will make a capital gain if the proceeds from disposing of cryptocurrency exceed its cost base. The cost base is the purchase price you paid for the crypto plus brokerage fees and any other costs associated with buying and disposing of it.
To work out your capital gain or loss, you'll need to find out the value of the cryptocurrency in Australian dollars at the time of the transaction. The ATO says you can access this information through a reputable online exchange.
Capital gains can be calculated by subtracting the amount you paid for a cryptocurrency from the amount you sold it for. The resulting figure forms part of your assessable income and needs to be declared on your tax return.
If you purchased crypto directly with Australian dollars, or sold crypto for Australian dollars, it's easy to calculate purchase and sale prices – just remember to include brokerage fees in the total cost for each transaction.
However, if you purchased your crypto holdings using a widely traded digital currency like Bitcoin, you'll need to note down the Bitcoin price at the time of that trade.
There are also some services available to help simplify the record-keeping process. For example, Koinly and Crypto Tax Calculator are just some of the providers that offer accounting tools for crypto investors and traders that can be linked to your crypto exchange accounts to help you calculate capital gains. The ATO also offers a useful CGT record-keeping tool.
You can estimate your crypto tax using our free crypto tax calculator.
Capital gains tax isn't charged at a separate rate to income tax. Instead, any capital gains you make from crypto assets are taxed at the same rate as your income for the financial year.
So the amount of tax you pay on cryptocurrency in Australia depends on your individual income tax rate. Use the table below to determine the rate at which you'll be taxed. Of course, don't forget that a 50% CGT discount applies to investments that you've held for at least a year.
|Taxable income||Tax you will pay on this income|
|$0 - $18,200||Nil|
|$18,201 - $45,000||19 cents for each $1 over $18,200|
|$45,001–$120,000||$5,092 plus 32.5 cents for each $1 over $45,000|
|$120,001 - $180,000||$29,467 plus 37 cents for each $1 over $120,000|
|$180,001 and over||$51,667 plus 45 cents for each $1 over $180,000|
You may be eligible for the personal use asset exemption. Cryptocurrency transactions are exempt from CGT if:
But there are a few terms and conditions that apply. The ATO explains that cryptocurrency is not classed as a personal use asset if it is acquired, kept or used:
The ATO also states that if you hold cryptocurrency for some time before using it to buy items for personal use, it's "less likely" to be classified as a personal use asset. In other words, the longer you hold your crypto before spending it, the smaller your chances of qualifying for the personal use asset exemption.
You also may not be able to take advantage of the exemption if you need to use a payment gateway or bill payment service to purchase the items on your behalf, so check the ATO's fine print carefully before deciding whether you can avoid CGT.
"It is important to keep proper records of all your crypto-related transactions – the ATO allows the use of software to help meet record-keeping obligations," explains Danny Talwar, Koinly's head of tax.
Records you should keep include:
For example, if you want to claim the personal use exemption, you'll need to be able to prove that you used your cryptocurrency to buy an item or service for personal use.
The ATO outlines examples of the records you should keep, such as:
There are also some services available to help simplify the record-keeping process. For example, CoinTracking is designed accounting tools for crypto investors and traders that can be linked to your crypto exchange accounts to help you calculate capital gains.
If you have not kept records of your tax, you can access historic price information from reputable websites that publish daily conversion rates for BTC/AUD, ETH/AUD etc. Your crypto exchange should also be able to provide you with details of your transaction history.
There are several simple things you can do to gain a deeper understanding of your cryptocurrency tax obligations and to make sure you're fully compliant with all ATO regulations, including:
However, the most important step you can take to better understand cryptocurrency tax is to talk to an expert.
Not only is Australian crypto tax complicated and confusing, it's also still evolving. While some people will have the knowledge to accurately report their crypto transactions themselves, many others – particularly those who have made substantial capital gains – will be better off getting help from an accountant or registered tax agent.
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