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<p>Are you Still trying to figure out whether crypto is legal in Australia? Or How crypto transactions are taxed by the ATO?</p><p>If you answered any one or both of these questions with a “yes”, you’re right where you should be. Because figuring it all out on your own can be intimidating for someone who has no idea where to start. So we decided to make things easier for you with this comprehensive crypto tax guide, which covers everything you need to know about crypto taxes in Australia and the rules governing them.</p><p>So let’s start with the most basic questions and build up from there.</p><h2 id="header-0">Is cryptocurrency legal in Australia?</h2><p>Yes, crypto is legal in Australia and is considered a capital asset(property) instead of a currency by the ATO(Australian Taxation Office) and taxed accordingly.</p><h2 id="header-1">How are cryptocurrencies taxed in Australia?</h2><p>The ATO doesn&#39;t consider Bitcoin and other cryptocurrencies as a form of currency and instead categorises them as property. Therefore, the disposal of crypto assets attracts capital gains tax in Australia. Note that the ATO categorises bitcoin, altcoins, NFTs, and other crypto assets under the term cryptocurrencies and therefore disposal of any of the following assets for a profit will attract tax liabilities.</p><p>However, there might be instances where crypto is viewed as an income by the ATO and is subjected to income tax.</p><h3 id="crypto-investor-vs-trader">Crypto Investor Vs Trader</h3><p>The tax rules differ for traders and investors in Australia, as the traders are generally liable to an income tax while the investors are usually owe capital gains tax. The story is quite similar for crypto investors and traders.</p><p>The <a href="https://www.ato.gov.au/individuals/capital-gains-tax/shares-and-similar-investments/share-investing-versus-share-trading/" rel="noopener noreferrer nofollow">ATO has issued clear guidelines</a> as to who is considered an investor and who is considered a trader. The guidelines have been explained in a more digestible fashion below if you don’t have the time to go through the entire document.</p><p>According to the ATO, a trader is a person or organisation that uses crypto transactions to generate a recurring income in a business-like fashion.Strategic buying and selling of assets through frequent crypto trades, or large-scale mining operations with specialized equipment, classify the individual or entity as a trader, and the resulting income is subjected to income tax.</p><p>While someone who invests in crypto assets for their portfolio and holds a long-term perspective or trades casually and mines occasionally just to utilize their spare computing power, is considered an investor by the ATO and any gains incurred by them is subjected to a capital gains tax. It’s important to note that investors may attract income tax depending on the nature of transactions and the source of income.</p><h3 id="crypto-capital-gains-tax-australia">Crypto Capital Gains Tax Australia</h3><p>As mentioned above, the ATO considers crypto to be a capital asset and therefore the disposal of these assets attracts a capital gains tax. Transactions listed below are considered disposals by the ATO:</p><ol><li>Selling crypto for fiat currency(AUD or any other)</li><li>Swapping one crypto token for another</li><li>Buying goods or services with a crypto asset</li><li>Gifting crypto</li></ol><p>It’s important to note that there are two sub-categories of capital gains taxes in Australia. If you hold your assets for more than a year before disposing of them, then you’re liable for a 50% discount on the capital gains you’ve made, while if you hold assets for less than a year before disposing of them, then you’re taxed at a higher tax rate called the short-term capital gains tax.</p><h3 id="capital-gains-tax-rate">Capital Gains Tax Rate</h3><p>The gains you’ve made by buying, selling, spending, or gifting your assets will be taxed based on your total income in a tax year. Here are the tax slabs divided by income groups:</p><p><img src="https://academy-public.coinmarketcap.com/optimized-uploads/4e414b43b973413e96c6de178f413ac8.png" /></p><h3 id="how-to-calculate-your-crypto-capital-gains">How to calculate your crypto capital gains?</h3><p>Determining your capital gains is a simple task of subtracting the cost basis (what you paid to acquire the asset) from its value at the time of disposal. If the result is positive (selling for more than what you paid), you have a capital gain and the disposal is taxable. Conversely, if it&#39;s negative (selling for less), it&#39;s a capital loss, allowing you to offset gains and lower your taxable income.</p><p>To calculate your cost basis, simply add the price you paid for the asset while acquiring it with the transaction fees or gas fees incurred at the time of acquisition and then convert it to AUD.</p><h3 id="income-tax-on-crypto">Income Tax on Crypto</h3><p>If you’re making an income from crypto assets, you’re liable to an income tax. Now there are various ways you can earn crypto as an income:</p><ul><li>Staking or mining rewards</li><li>Strategically trading crypto assets</li><li>Through lending activities on De-Fi platforms</li><li>Creating your own NFTs and selling them</li><li>Validating on-chain transactions and collecting rewards for them</li><li>Earning through Play-2-Earn, Learn-2-Earn, Watch-2-Earn Web3 platforms like Brave, Coinbase Learning, Odyssey, and Axie Infinity</li><li>Receiving airdrops</li><li>Receiving referral rewards</li><li>Receiving crypto as payments in exchange for a product or a service</li></ul><h2 id="header-2">Tax on Lost or Stolen Crypto</h2><p>In Australia, lost or stolen cryptocurrency is considered a capital loss for tax purposes and can be used to offset capital gains from other investments. The loss can be reported on an individual&#39;s tax return and must be supported by evidence, such as a police report. If the assets cannot be recovered, the capital loss can be carried forward to future financial years.</p><h2 id="header-3">Tax on Buying Crypto</h2><p>No, there is no tax on buying cryptocurrency in Australia. However, if the cryptocurrency is later sold at a profit, the profit may be subject to capital gains tax.</p><h2 id="header-4">Moving crypto between Wallets, Exchanges and Pools</h2><p>As long as you’re moving assets between wallets or exchanges that you own, the event is not considered a taxable event. However, the transaction fees paid to move the assets are considered as a disposal and are subjected to a capital gains tax in Australia.</p><p>Similarly, funds moved from one liquidity pool to another follow the same rule. It’s a non-taxable event in the eyes of ATO.</p><p>However, note that it’s important to keep track of all these transactions to accurately calculate the cost basis for all your assets and that may be an intimidating task for many as their investments are spread across wallets, exchanges, and De-Fi protocols.</p><p>A smart step would be to use an online crypto tax calculator like <a href="https://kryptos.io/" rel="noopener noreferrer nofollow">Kryptos</a>, which can easily track all your transactions from across your trading and investment profile and even creates legally compliant tax reports seamlessly with a click of a button. All you need to do is to add all your wallets and investment profiles on the website and let the software do the job for you.</p><h2 id="header-5">Some Tax-Free Crypto Transactions</h2><p>In Australia, the following crypto transactions are tax-free:</p><ul><li>Personal use asset transactions, such as buying cryptocurrency to hold as a personal investment, are exempt from capital gains tax if the cost is less than AUD 10,000.</li><li>Transferring cryptocurrency between personal wallets.</li><li>Trading cryptocurrency for other cryptocurrencies, as long as the transaction is not part of a profit-making scheme.</li><li>Using cryptocurrency to purchase goods or services for personal use.</li></ul><h2 id="header-6">Frequently Asked Questions(FAQs)</h2><p><strong>1. Can the ATO track crypto transactions?</strong></p><p>Yes, the ATO can track cryptocurrency transactions. The ATO has access to various sources of information, such as data from cryptocurrency exchanges and blockchain analytics tools, to identify individuals who have conducted significant cryptocurrency transactions. The ATO may use this information to ensure individuals are correctly reporting their cryptocurrency gains and losses on their tax returns.</p><p><strong>2. How are airdrops and forks taxed in Australia?</strong></p><p>In Australia, airdropped and forked cryptocurrencies are considered taxable income and must be reported on an individual&#39;s tax return. The value of the airdropped or forked cryptocurrency on the date it was received is considered its cost to calculate capital gains tax when it is later sold. If the cryptocurrency is held for 12 months or more, it may be eligible for the capital gains tax discount. Additionally, if the airdrop or fork is part of a profit-making scheme or carried out in the course of carrying on a business, the value of the airdropped or forked cryptocurrency may be subject to ordinary income tax.</p><p><strong>3. What if I can&#39;t afford my crypto tax bill?</strong></p><p>If you cannot afford to pay your crypto tax bill in Australia, you have several options:</p><ul><li>You can contact the Australian Taxation Office (ATO) and request to set up a payment plan to pay off the tax debt over a longer period.</li><li>You can request an extension of time to pay the tax debt.</li><li>If you are experiencing financial hardship, you can apply to have your tax debt remitted (cancelled) or varied (rearranged).</li><li>You may consider seeking assistance from a tax professional or financial advisor to help you manage your tax debt.</li></ul><p>It&#39;s important to take action as soon as possible and not ignore the tax debt, as this may result in additional fees and interest charges.</p><p><strong>4. Is there a legal way to avoid taxes in Australia?</strong></p><p>No, there is no legal way to avoid paying taxes in Australia. It is a legal obligation to accurately report all taxable income, including profits from cryptocurrency transactions, and pay the appropriate amount of tax. Failing to accurately report income and pay the required taxes can result in significant fines and penalties, as well as potential criminal charges. It&#39;s important to comply with all tax laws and regulations in Australia and seek professional advice if necessary.</p>

Kryptos: Your Complete Guide To Australian Cryptocurrency Taxes

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Andre artikler publisert på 8. feb. 2023

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