Have you done any crypto trading?

If you have purchased and sold cryptocurrencies you are obliged to report the gains or losses in your tax return. Trading on Australian exchanges will alert the ATO about your activity, so the tax implications cannot simply be ignored.

How are Crypto currencies taxed in Australia?

The ATO view Crypto currencies as an asset, which means when disposed of capital gain tax arises. Although it can also be taxed as ordinary income depending on your trading.

Trader vs Investor

Investors are those that hold for longer periods in the hope of larger returns on their investments. Once sold a capital gain event is triggered. Most Australians who invest in crypto currencies will fall under this category. You can still derive ordinary income as an investor.

Traders on the other hand buy and sell crypto currencies regularly with shorter holding times, it is usually operated as a business to generate income.

Airdrops and staking rewards

These are classified as ordinary income by the ATO and will trigger a tax liability upon receiving them. If the value of the token you received in an airdrop or staking program changes before you dispose of it then a capital gain or loss is triggered. The capital tax will be calculated at the price you receive the token. For example, if you receive a token valued at $1.00 then sell the token for $1.10, you would have to report $1.00 as ordinary income and a capital gain of $0.10.

Capital gains tax

A capital event is triggered when you
• sell Crypto for Fiat currency (E.g., AUD)
• Swap one crypto currency for another (E.g., BTC to Eth), this includes stable coins such as USDT
• Spend crypto currencies to pay for a service or product
• Send crypto currency as a gift.

If you hold your crypto for at least one year before selling, a 50% CGT is applied to any gain you may have made massively reducing your tax liability. If you sell your investments at a price lower than what you purchased it for then a capital loss arises. This loss can be offset against any gains made in that financial year decreasing your overall capital gain, or it can be carried forward to future years.

Capital gains tax is not taxed separately. Your total capital gain is added into your taxable income for that financial year, where your total tax liability will then be calculated. If you have no income in a financial year but have made a capital gain, the tax-free threshold will still apply, so no tax will have to be paid for any gains below $18,200.

What is needed in order to complete a Crypto trading tax return

In order to get a clear and accurate picture of your crypto trading, all your wallets would need to be accounted for and so we request the following information to be provided to us:
• CSV files from all exchange platforms with all transactions that have taken place for the financial year.
• A public wallet address for any trading that may have been done on decentralised exchanges such as uniswap, opensea, and pancake swap.

For any question please contact Ali on 08 9209 3260 or via email on ali@staradvisers.com.au