Cryptocurrency Investor Tax Obligations

Investing in cryptocurrency?

We can take the stress away for you so that you understand and can prepare for how cryptocurrency investments are taxed, so that you can avoid possible penalties, issues or audits in the future.

SELL OR SWAP

Whether you sell cryptocurrency for AUD or exchange one form of cryptocurrency for another, you will always be liable for Capital Gains Tax (CGT) and will therefore need to record any gain on your tax return.

PERSONAL USE

It is common to mistakenly believe you can buy up to $10,000 of cryptocurrency and avoid CGT by taking advantage of the exemption for personal use.
The personal use exemption only applies when the cost of the cryptocurrency does not exceed $10,000 AND you can establish that the cryptocurrency was to fund genuine personal expenditure.

TRADING

For those that trade cryptocurrency on a regular basis with the goal of making a profit, then any profit on the disposal of the cryptocurrency will not be subject to CGT. Instead, it will be measurable income as you will be regarded as a trader instead of an investor.

KEEPING RECORD

Keeping thorough records is essential for tax time to allow your tax agent to prove all transactions and expenses.
Types of records that should keep include:

  • Receipts of purchase or transfer of cryptocurrency
  • Exchange records
  • Records of agent, accountants, and legal costs
  • Digital wallet records and keys
  • Software costs related to managing tax affairs