• Australia crypto users and ATO
• Capital Gains Tax (CGT) – 12-month CGT discount – Capital loss
• Calculation of capital gains or capital losses
• Is CGT applying for disposed cryptocurrency?

Australia crypto users and ATO

The Australian Taxation Office estimates between 500,000 and 1 million Australians own cryptocurrency. The Australian Tax Office (ATO) does not view cryptocurrency as money, either Australian Dollar or any fiat currency. Instead, it is viewed as ‘property,’ a CGT asset for tax purposes.

Capital Gains Tax (CGT)

The ATO classifies digital currency as a CGT asset, similar to a share in a company. If you own an asset and make a profit after selling, trading, or transferring that asset, you will have to pay taxes on the capital gains you earn.

Example: If you purchase bitcoin at a price of $2,000 and later sell it for $3,500 then you’ve made a capital gain of $1,500, and will therefore incur a tax obligation.

12-month CGT discount

If CGT rules apply, virtual currency held by Australian tax residents for more than 12 months is eligible for a 50% capital gain tax discount. In essence, this means that 50% of the net profit is free from taxation.

Capital loss

If your crypto asset is less valuable than when you first bought it, this is known as capital loss.

Example: If you made a capital gain of $2,500 on one trade and a capital loss of $1,500 on another trade, your overall capital gain is $1,000. This loss can be used to offset gains made in that financial year or it can be carried forward to offset gains made from future Cryptocurrency investments.

Calculation of capital gains or capital losses

To calculate capital gains or losses by evaluating this information through reputable online exchanges, it is important to know the value of cryptocurrencies in the Australian dollar.

If you buy or sell cryptocurrencies directly in Australian dollars, the selling and buying prices are very simple and you should consider the brokerage fees included in each transaction. However, if the purchase or sale was made in an alternative cryptocurrency, it must be accounted for at the Australian market price at the time of the transaction.

Your profit or loss is the amount you sold your cryptocurrency (because it is equivalent in Australian dollars) minus the amount you purchased it.

Is CGT applying for disposed cryptocurrency?

If cryptocurrency has been disposed of but not removed from a digital wallet, it will still result in a CGT taxable event. Instead of the actual selling value, the tax authority will consider the AUD market value of the digital asset on the day of its disposal.