I'm Thomas Cane the tax advisor at Goodwill Chartered Accountants. Today we're going to look at three frequently asked questions of crypto tax that's in relation to Australian businesses.
1. How is it taxed when you're receiving cryptocurrency or Bitcoin into your business?
When payment for goods and services is received and that payment is received in crypto currency or Bitcoin, then that triggers the taxing point. The taxing point is what you call the date it is actually received so when you receive the cryptocurrency on that date, the value of the crypto currency or the Bitcoin as at that date in Australian dollars is what you pay tax on in Australia. So it's considered ordinary income and the business is subject to taxable income and GST.
2. If you want to pay your employees in cryptocurrency what are the tax implications in Australia?
So there are two scenarios here, one falls under salary sacrifice that is when you're paying your employees in either partially or fully cryptocurrency and you have a salary sacrifice arrangement in place. So when that happens you're not actually withholding the tax for the money value that you were giving to the employees, that means that they fall under the fringe benefits tax scheme and when that happens you basically are paying $1 tax as a business for every $1 benefit you were providing to your employee. In cryptocurrency the other scenario is just normal wages, so when you're receiving cryptocurrency and there is no salary sacrificing arrangement in place, then the employer will withhold tax at normal marginal tax rates and pay them to the ATO on the employees behalf.
3. What record should be kept for crypto tax for businesses?
Well it's very important that you keep a record of every transaction that occurs in cryptocurrency. So that is you're keeping a record of the date and the amount of the cryptocurrency (or the number of coins being transferred to or from the business) and you're keeping a track of the value of the cryptocurrency the value you know Aussie dollars, that is at the time of the transfer. Whether that's to or from your business, you can keep your own records of cryptocurrency. But note that there are many new online tools coming available to find out more information about cryptocurrency tax for your business.