The Australian government will tax any capital gains you make from investing in cryptocurrency. You have to report both capital gains and losses on your tax return and pay tax on any gains that are more than your losses. Bitcoin Motion is a platform that allows anybody to trade bitcoins and make profits.
Even though it is called “Capital Profits Tax,” there is no separate tax for it in Australia. Any profits you make will be counted as “assessable income” and taxed as part of your income. The income tax you have to pay is the same as the rate for your payment, but you won’t have to pay it until you make $18,201. But if you keep the item for a year, you can get a 50% tax break on the capital gains you make from selling it.
If you bought, sold, or made money with cryptocurrencies during the last fiscal year, you need to tell the Australian Taxation Office (ATO) about it on your annual tax return.
How does Australia tax digital currencies?
Because of this, the Australian government does not accept Bitcoin and other cryptocurrencies as money or foreign currency. Instead, the ATO sees cryptocurrency as property and counts it as an asset when figuring out Capital Gains Tax (CGT). This group includes coins, tokens, non-fungible tokens, and stablecoins. Depending on the transaction, though, the income tax system could see cryptocurrency as extra income and tax as such.
When you sell your cryptocurrency as an investor, you should think about whether or not you will have to pay capital gains tax (CGT) (CGT Event). Not always; the best way to get rid of something is to sell it. This is called a transaction when you give your cryptocurrency to someone else.
- Trading cryptocurrencies for Australian Dollars (AUD) or other fiat money.
- Stablecoins and non-fungible tokens are two types of cryptocurrencies that can be traded for other cryptocurrencies.
- Using cryptocurrency to buy goods and services people need daily (if not seen as a personal asset).
- Giving away digital money
- Remember that you can deduct up to 50% of your capital gains if you hold on to your cryptocurrency for at least a year before selling it.
Capital Gains Tax rate
As an individual investor, your net capital gain is taxed at the same rate as your total income when you sell, trade, spend, or give away cryptocurrency. How much you pay in taxes depends on how much you made during the last tax year. How to figure out how much money you’ll make by investing in cryptocurrency Capital gains are calculated the same way whether you trade traditional or crypto assets.
When you sell or get rid of your cryptocurrency, the price difference between when you bought it and when you sold it tells you if you made a capital gain or loss. A capital gain is when the value of your cryptocurrency goes up, and you make money from it. The capital gains tax says you need to pay tax on that profit. If the value of your cryptocurrency goes down, you have a capital loss and don’t have to pay taxes on it.
To determine if you made a profit or a loss on your investment in capital, you must first find out how much it costs you to buy. To put it another way, your cost base is the amount of Australian dollars it costs you to buy your cryptocurrency, plus any fees you have to pay to buy or sell it.
How to figure out the cost base of a cryptocurrency
Once you know your cost basis, it’s easy to take this amount away from the price you got for your cryptocurrency when you sold it. If you sold your cryptocurrency differently, take this amount away from what it was worth in Australian dollars on the open market on the day you sold it.