Crypto Investor vs Trader for Tax Purposes in Australia

I’m Thomas Cane the tax advisor at Goodwill Chartered Accountants. Today we’re going to look at whether you could be considered a crypto investor or a crypto trader for tax purposes in Australia.

Crypto Investor vs Crypto Trader

First I want to look at what who is actually considered a crypto investor. A crypto investor is one who holds their cryptocurrency and is seeking to hold their cryptocurrency long enough for the value to increase. And then with the value increasing they were seeking to sell their cryptocurrency and make a gain. Whereas a crypto trader is one who is buying and selling cryptocurrency at a regular pace and seeking to beat the market through a frequent buying and selling, and making use of market and volatility.

Buying Intention (ATO’s view)

The difference between a cryptocurrency trader and a cryptocurrency investor comes down to intention. So what is the intention when you first purchased Bitcoin or cryptocurrency are you purchasing that cryptocurrency with a long term view in mind, you’re just trying to buy cryptocurrency and wait for the value to go up or you buy in cryptocurrency and you’re wanting to trade it regularly. Once you narrow down what your actual intention is then this is what the Australian Taxation Office is going to use to determine whether you are a cryptocurrency trader or whether you are a cryptocurrency investor. Note that this is the ATO’s current view and position on cryptocurrency trading and investing which could change at any point in time.

Feel free to contact me on my website or send me an email at thomas@goodwillca.com.au