What Is Bitcoin Taxed at in Australia?
We are all aware that taxes are compulsory and that they are applied to near enough everything including your income. But did you know, that Bitcoin is considered as an asset and can also be taxed?
If you live in the land down under are involved with cryptocurrency trading, then it’s important that you are aware of the tax consequences and policies withinAustralia.
To help you understand more about the taxation of Bitcoin in Australia, we have put together some information that may help you below.
The Guidelines for Cryptocurrency Taxes in Australia
When it comes to the taxation policies of cryptocurrency, the Australian Tax Office (ATO) has certain guidelines about this. At the time of writing 28 August 2018, according to the ATO, Bitcoin and other cryptocurrencies are neither Australian or foreign currency, which means that it is subject to Capital Gains Tax (CGT). This applies to all other cryptocurrencies as well.
Essentially, the Capital Gains Tax is the tax that is applied to the profit of a sale of an investment or a property. In this case, CGT is applicable when you sell your cryptocurrency, such as Bitcoin. If you have held your cryptocurrency for 12 months or more, then you may be applicable for the Capital Gains Tax discount of up to 50%. For businesses, you will not be entitled to any capital gains tax discount and you will need to pay 30% tax on any net capital gains.
There are a few types of transactions that subject to CGT, including:
- Selling your cryptocurrency to a fiat currency, such as Australian dollars.
- Trading to buy other cryptocurrencies.
- Purchasing goods or services using cryptocurrency.
Calculating Capital Gains Tax on Bitcoin
There is a quick and simple way of working out how much capital gains tax you will need to pay when selling your Bitcoin. Simply, take the selling price and subtract its original cost and the associated expenses. The amount that you have left will be your capital gain or capital loss. For individuals, the tax rate paid will be the same as your income tax rate for that year.
Exemptions from Capital Gains Tax
Cryptocurrency can be classified as a ‘personal use asset’ if it is obtained and kept or mainly used to buy items for personal use. Generally, if your cryptocurrency is a personal use asset, then the capital gains or losses that come from the selling of the cryptocurrency can be disregarded. However, capital gains tax will only be exempt if you use cryptocurrency for a personal useand have a capital gain or loss of $10,000 or less.
If your business receives Bitcoin or cryptocurrency for the goods or services you provide, then you will need to include the value of Bitcoin in Australian dollars as part of your ordinary income. This is the same process for any other non-cash barter transactions.
Read More From Crypto News Australia
As Tax can be a complicated subject for even the best of us, we have written a separate guide called Australian Bitcoin & Cryptocurrency Tax Laws 101 which explains everything in more details.