Cryptocurrency and Tax
How it works in Australia
Cryptocurrency and tax – it’s a complex landscape and one which many accountants in Australia choose to steer clear of. At Greenhalgh Pickard, however, our commitment to remain innovative, has led us to assist cryptocurrency traders with their tax returns.
So what exactly is Cryptocurrency?
Cryptocurrency is a digital or virtual currency that is secured by cryptography (a secure communication technique which allows only the sender and intended recipient to view its contents), making it nearly impossible to counterfeit or double spend.
The whole crypto movement began in 2009 with the launch of Bitcoin, and there are now over 1,600 listed cryptocurrencies.
“… there are now over 1,600 listed cryptocurrencies.”
The complexities around cryptocurrency and tax
Capital Gains Tax (CGT) applies to income earned when disposing of cryptocurrency through selling, trading, exchanging, converting to fiat currency or using crypto to purchase goods and services. However, the taxable amount differs based on the purpose you use cryptocurrency for.
Whether you engage in crypto as a personal asset, or use it within your daily business trading, the tax payable differs. There are various types of transactions and purposes within crypto trading and Greenhalgh Pickard can help differentiate your circumstances.
What you need to remember when reporting your tax
The ATO have announced they are strictly targeting crypto traders to check their compliance with the tax standards. It is now more than ever, crucial to be aware of your responsibilities and know the consequences of getting it wrong.
Whilst the anonymity of the crypto world is largely unregulated, tax obligations are still mandatory. The ATO are able to track where the online world intersects with the real world, through assessing your digital movements in banks and other financial institutions and cryptocurrency online exchanges.
The most important thing to remember when lodging your tax return is to include every crypto transaction made from July 1 to June 30. Lodging your own tax return means that you should have it completed by the last day of October. However, if you have an accountant or tax agent helping you, you have until March 31 the following year.
When keeping your crypto transaction information, make sure you collect the following:
Purpose (personal use, gift, etc.)
Crypto value at the specified date of transaction
Details of the receiver or other party involved (can simply be the crypto wallet address).
Greenhalgh Pickard can help with your Cryptocurrency and Tax
If you have traded crypto in the 2020-21 financial year, the ATO wants to know about it. If you are unsure on how to accurately declare this on your return, give the professionals at Greenhalgh Pickard a call today.