Accountants South Yarra

Investing cryptocurrency and the Australian tax system

Crypto Tax Australia


Investing in cryptocurrency done easy

Calling all long-term cryptocurrency investors who buy and hold, your tax status will differ from a trader, miner, or someone who utilizes cryptocurrencies for everyday transactions.

As a long-term investor, your goal is to accumulate money through compound interest, but having a portion of your earnings taken away owing to taxes might put a damper on things.

Fortunately, Ingrams Accounting is here to assist you. Our tax professionals are well-versed in Australia’s cryptocurrency rules and will ensure that you are treated fairly and save as much money as possible. Speak to our cryptocurrency investors accountants today.

cryptocurrency investors

How are long-term cryptocurrency investors taxed?

If you’re a long-term cryptocurrency investor, this is how you’ll be taxed under ATO guidelines:

  • Any gain made on the sale of crypto that was owned for less than a year is 100% tax assessable
  • Any loss on cryptocurrency sold is not an outright tax deduction but can offset your gains in future tax years
  • Any gain made on the sale of crypto that was owned for more than a year is 50% tax assessable

For tax purposes, the day and time you sell your crypto counts, which is why you should keep precise records and engage with a professional accounting firm like Ingrams Accounting to ensure everything is in line. Speak to our cryptocurrency investors accountants today.

Cryptocurrency for personal use

Cryptocurrencies were designed to be used as an electronic payment method, not just as a store of value, and we’re seeing more and more businesses accept cryptocurrency, as well as services that allow you to pay your AUD bills with crypto and even debit cards that you can use to buy things with your crypto.

You may be subject to taxation when you spend any cryptocurrency, just like when you pay with AUD.

If your intention in purchasing crypto is to use it to buy goods or services for personal consumption, and:

  1. You use your coins over the internet to acquire those goods or services, AND
  2. The original purchase cost of the crypto was under $10,000 AND
  3. That same amount of said cryptocurrency increased in value before you purchased those goods or services

Any gain on the value of the cryptocurrency from the time you bought or mined it until you swapped it for a product is not subject to income tax or GST, as long as you utilize it for personal rather than commercial purposes. Speak to our cryptocurrency investors accountants today.

Common questions

When I trade one Cryptocurrency to another Cryptocurrency is this a taxable event?

The ATO has made it clear that cryptocurrency transactions are to be treated like any other business transaction. If you trade Bitcoin for Ethereum, then the profit/loss from your trades needs Accounting for in Australian dollars (AUD).

Do I have to declare my Cryptocurrency gains and losses in my Tax returns?

YES! Cryptocurrency trading and investing is a new concept for many people, and you will need to declare your profits in the next tax return. A capital gains tax asset is defined as “any kind” of Property – including cryptocurrency. This means that Bitcoin and other cryptocurrencies are defined as Property under Australian Tax Law.

Is trading between two cryptocurrencies taxable?

Crypto to Crypto transactions is taxable events according to the Australian Tax Office which means you have to declare your profits or losses in Australian dollars from trade between two different cryptocurrencies.

Can I deduct money I borrowed to pay for cryptocurrencies?

Interest paid on money borrowed to invest in Cryptocurrency can be brought as a specific tax deduction. To claim this, evidence will need to show that the lender’s funds were used specifically for cryptocurrency investments.

Get your accountancy done with a smile.

Free 15 minute consultation with cryptocurrency investors accountants to discuss your business’s circumstances.

    9826 6000
    Level 2 18/25 Claremont St
    South Yarra Victoria 3141

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