The Australian Taxation Office (ATO) is issuing this information sheet to make sure Australians are aware of their tax obligations when using cryptocurrency such as Bitcoin. From a taxation perspective, the ATO’s view is that transacting with cryptocurrencies is akin to a barter arrangement, with similar tax consequences. If you are trading in crypto, you’re required to declare all gains made from the sale or exchange of any cryptocurrency.
Australia is putting in place the right regulations for cryptocurrency trading to flourish. The ATO has published a lot of information on its website, which aims to help cryptocurrency traders understand their tax obligations.
The ATO Has Access to Cryptocurrency Holdings
The ATO is able to receive transaction records from Australian cryptocurrency exchanges when Australians use Bitcoin as a payment method when buying goods and services. This information will assist the ATO in ensuring people are meeting their tax obligations, which include:
– Determining your income for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936)
– Making sure people are meeting their tax obligations when using cryptocurrency in a business context under the Goods and Services Tax Act 1985 (GST Act).
The ATO is working with other countries to share intelligence about cryptocurrencies.
Crypto Trading vs. Crypto Investing
The ATO is aware that cryptocurrency trading has different tax consequences to other kinds of investing, including trading in shares or commodities. This information sheet aims to provide clear practical guidance on the taxation treatment for transactions involving cryptocurrencies to help people understand how the tax law applies to their particular circumstances.
Here are some common examples of cryptocurrency transactions that you need to be aware of:
a. Using Bitcoin as a payment method to buy goods or services
b. Supplying goods and services in exchange for cryptocurrency, such as a computer tech support business accepting Bitcoin as payment from international customers
c. Accepting Bitcoin as part of an employee remuneration package – the taxable value of this would be the market value at the time it is provided to the employee.
d. Exchanging one cryptocurrency for another cryptocurrency (for example, exchanging Bitcoin for Ethereum)
e. Operating a cryptocurrency ATM where you exchange Australian dollars in your bank account for Bitcoin that are then sent to a digital wallet address using an ATM operator service.
f. Receiving cryptocurrency as a result of an initial coin offering (ICO) – this is treated as income received from selling or disposing of ordinary assets, such as shares or gold bullion, which would be subject to capital gains tax (CGT).
g. An Australian cryptocurrency exchange facilitating your acquisition and disposal of cryptocurrency.
It is important to note that not all tax agents are conversant with cryptocurrency taxation implications. However, at Accurate Business & Accounting Services, we have extensive experience in this area and are able to assist you with all your cryptocurrency taxation needs.
When providing goods and services using cryptocurrency, it is a requirement that the market value in Australian dollars is recorded at the time of supply (or exchange). This would apply equally to employees and investors exchanging cryptocurrency for other cryptocurrencies.
Get Professional Help With Crypto Tax Matters
Do not make the mistake of trying to conceal your cryptocurrency activities from the ATO. Do not underestimate how much the ATO knows. With all your cryptocurrency transactions being recorded by the exchanges, there is no hiding place for you inside or outside of Australia.
It would appear that hiding your virtual currency transactions is no longer an option, as the ATO has announced it will be expanding its data-matching systems.
Contact Accurate Business & Accounting Services today for more information on how we can help you cryptocurrency tax returns in Sydney.