It’s critical to understand your Australian crypto tax obligations if you’ve bought or sold cryptocurrency in the last financial year. Bitcoin and other cryptocurrencies are taxed in Australia, but how you’re taxed depends on the sort of crypto transaction and your situation.
In this article, we’ll go over the fundamentals of Australian cryptocurrency tax so you can figure out what you need to do to keep the Australian Taxation Office (ATO) pleased. Your responsibilities will differ based on whether the ATO classifies you as a crypto investor or trader. The difference between the two is if you’re running a business or not.
If you want to make money by buying or trading cryptocurrencies, the most likely scenario is that you will be considered an investor. Cryptocurrency isn’t recognized by the ATO as currency. Instead, if you’re an investor, the tax office considers cryptocurrency a capital gains asset (CGT) — just like shares and a variety of other assets.
However, if you buy and sell significant quantities of crypto in a businesslike manner, the ATO may consider you to be running a cryptocurrency trading company. If this is the case, your earnings are considered employment income and subject to payroll tax.
Cryptocurrencies are tracked in a blockchain – a digital journal or “ledger” that records and stores all crypto transactions. This ledger is “decentralised”, which means it is not controlled by any one bank, government or company. Instead, the ledger has multiple copies stored all over the world, and each copy contains the same transaction history.
If you have an account with any crypto service in Australia, chances are high that the ATO already has your data on file. When you sign up for these types of exchange or wallet services in Australia, they’re required by law to share this information with the ATO, as technology advances, so do the ways and sources from which the ATO can legally gather info – meaning there’s nowhere to hide if you own cryptocurrency or use foreign currency exchange platforms.
Crypto Tax Calculator Australia is a great application to help you stay compliant with your crypto taxes. With the ever-changing landscape of cryptocurrencies, it can be hard to keep track of your profits and losses. This calculator takes the hassle out of the process, so you can focus on what’s important – keeping up with the latest news in the crypto world!