Cryptocurrency is treated as property for tax purposes in Australia. This means that selling, trading, or disposing of crypto may have Capital Gains Tax (CGT) implications under the Australian Taxation Office (ATO) rules.
What is Capital Gains Tax?
Capital Gains Tax is a tax on the profit you make when you sell or dispose of an asset, such as property, shares, or cryptocurrency. If you sell your crypto for more than you paid for it, the profit is called a capital gain and may be subject to tax.
When Does CGT Apply to Cryptocurrency?
CGT applies when you:
- Sell cryptocurrency for money
- Trade one cryptocurrency for another
- Use cryptocurrency to pay for goods or services
- Gift cryptocurrency (except to your spouse)
How is Capital Gains Calculated?
Your capital gain is the difference between:
- The amount you received when you sold or disposed of the crypto
- The cost base, which is usually the amount you paid to acquire it plus any related costs (like transaction fees)
If you made a loss, this is called a capital loss and can be used to reduce capital gains in the same or future years.
CGT Discount
If you held the cryptocurrency for more than 12 months before disposing of it, you may be eligible for a 50% CGT discount on the capital gain, reducing your taxable amount.
Record Keeping is Important
The ATO requires you to keep detailed records of your cryptocurrency transactions, including:
- Dates of acquisition and disposal
- Value in Australian dollars at those times
- Purpose of the transaction
- Records of all related costs
Important Notes
- Personal use assets (for example, small amounts of crypto bought and used for personal items under $10,000) are generally exempt from CGT.
- For people with a high volume of cryptocurrency trades or sales, using platforms like Koinly or Cryptotaxcalculator can make it much easier to calculate gains and losses. These tools can also save time and money by reducing the hours your accountant needs to spend manually reviewing transactions.
- Cryptocurrency taxation is complex and subject to change. This summary is general in nature.
For advice tailored to your specific situation, speak with the team at Hervey Bay Tax Solutions.