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Crypto Tax Australia: Everything You Need to Know
Luis Clark
Crypto traders in Australia are now subject to the same tax laws that apply to all Australian citizens, regardless of whether they have made any cryptocurrency gains or losses. However, there are some important things that you need to know about paying taxes on your crypto trading activity in Australia.
In this article, we will cover everything from when and how much tax applies when dealing with cryptocurrency, to what constitutes taxable events such as buying or selling cryptocurrencies. Crypto tax australia. Let’s dive in!
How do I calculate my taxes if I have made gains from buying, selling, and exchanging crypto?
- What is a crypto tax calculator?
- Are there taxes on lost or stolen crypto?
- Is there a tax levied on NFTs in Australia?
- Is there a tax on crypto gifts and donations in Australia?
A list of the best crypto tax calculators in Australia, a concise definition of personal use assets, and further questions like what if you have a capital loss from your crypto trading activity, are all covered in this post to help improve your understanding of crypto taxes in Australia, including if you are subject to pay capital gains tax or income tax.
For the longest time, governments and those in power ignored cryptocurrencies and all blockchain-based assets, believing that they were just a fad that would lose their momentum with time.
These assumptions were further defended and propagated by banks and other financial institutions that stood to lose much business if blockchain technology was more widely adopted. Naturally, a decentralized world would remove the need for intermediaries.
However, the past decade has only bore witness to the rising popularity of blockchain technology and cryptocurrencies. Governments and financial institutions can no longer deny that the blockchain is here to stay.
Currently, governments all around the world are adopting blockchain technology to make their own Centrally-Backed Digital Currencies (CBDCs), while banks are using the blockchain to provide innovative solutions to customers while reducing their own transaction costs.
In this environment, it was necessary for governments to start treating crypto like a proper asset for investment, a class that could be taxed since billions of dollars were moving through the industry. The Australian government is at the forefront of the taxing movement and has introduced a myriad of taxation laws to deal with the growth in the blockchain industry.
Do You Have to Pay Taxes on Your Crypto in Australia?
You have to pay taxes on your crypto assets in Australia. You need to declare them on your tax return and record the fair market value of each asset at the time of declaration. If you don’t declare them, then you could face penalties and/or interest charges.
To calculate the amount of tax owed, determine what is subject to capital gains or income tax before you declare a capital gain as this is not considered ordinary income.
Can the Australian Tax Office track Crypto?
The Australian Tax Office (ATO) can track all types of cryptocurrency transactions. This includes:
- Crypto exchanges, where you buy or sell cryptocurrencies for fiat currency (such as Australian dollars).
- Crypto wallets, where you store your private keys and other information about your digital wallet.
- Mining pools and other groups, allow people to come together to mine for coins using their computers’ processing power instead of using expensive ASICs (application-specific integrated circuits).
What is a Taxable Event?
A taxable event is any action that results in you owing taxes to the government. Talking specifically about crypto taxes, a taxable event is when you sell or exchange your crypto for fiat currency or any other crypto transactions where you swap assets, for example. It’s also when you buy crypto with fiat currency.
Taxable events are different from personal use assets, which are used for earning income or investment purposes and may be able to avoid tax on the gain from selling them (see below).
Taxable events include:
- Selling cryptocurrency for AUD – this includes selling Bitcoin; Ethereum; XRP; Litecoin etc., but not other cryptocurrencies such as Monero or Zcash as these are considered ‘non-financial investments’. For example, if you bought 10 BTC earlier this year at $20,000, then sold them all today at $2,600 per coin, this would be an example of a taxable event because now there’s less than half left in your portfolio value. It counts towards taking account of any capital gains made over time by comparing what they were worth before purchase versus now after the sale. In the previous example, you would actually report a net capital loss.
Crypto Capital Gain Australia
You can calculate your capital gain using the following formula:
- To calculate your capital gain, you first need to subtract the current value of your investment from the initial value of your investment and then divide the result by the initial value of the investment. That will give you the percentage of your capital gain.
- If you bought your crypto for more than its current market value, then it’s considered a net capital loss.
- If you bought your crypto for less than its current market value, then it’s considered a capital gain.
Australian Crypto Capital Gains Tax Threshold
There are different tax brackets for Crypto taxes in Australia. The following table shows the income taxes for each bracket:
Income Tax Rate
$0 – $18,200 0%
$18,201 – $45,000 Nil + 19% of the excess over $18,200
$45,001 – $120,000 $5,092 + 32.5% of the excess over $45,000
$120,001 – $180,000 $29,467 + 37% of the excess over $120,000
$180,000+ $51,667 + 45% of the excess over $180,000
How Do I Calculate My Taxes if I Have Made Gains from Buying, Selling, and Exchanging Cryptos?
The next step is to calculate your capital gains and losses. Capital gains are the difference between what you paid for a cryptocurrency and how much you sold it for (minus any expenses).
Capital losses, on the other hand, can be used to reduce your taxable income, but they’re not counted as income in this calculation. They will also reduce any future capital gains made on cryptocurrencies that were purchased during the same year.
The net capital gain or loss is calculated by adding together all of these different elements:
- Your taxable income from other sources including dividends and interest earned on bank accounts
- Any other types of investment income (such as rental properties)
- Any foreign currency exchange rates used when converting funds into Australian dollars
- Your net profit/loss from selling cryptocurrency assets
What is a Crypto Tax Calculator?
A crypto tax calculator is a tool that can be used to calculate your crypto gains and losses. It assists you in understanding the tax implications of trading cryptocurrencies, as well as calculating how much you owe in taxes when filing your annual income tax return.
A cryptocurrency tax calculator helps traders understand if they have to pay tax on their profits or losses from trading cryptocurrencies like Bitcoin, Ethereum, and other altcoins. These tools keep detailed track of all your crypto transactions and provide you with a detailed crypto tax report.
These calculators are available online at any time of day or night (or even during business hours). They are also very easy to use—you just need some basic information about yourself before starting your calculation! You can easily find a free service to fulfill your needs.
Best Crypto Tax Calculators to Help You Calculate Capital Gains Tax
There are a lot of crypto tax calculators out there, and they all claim to be the best.
But what do you really need?
We’ll look at the most popular cryptocurrency tax calculators in Australia and compare them so that you can make an informed decision about which one is right for your business or personal investments. We’ll also help you figure out how much money you would save by using one of these tools instead of doing it manually (or not at all).
Let’s start by taking a look at what makes a crypto tax calculator good.
What to look for in a crypto tax calculator?
The first thing to look for when selecting a crypto tax calculator is whether it’s up-to-date or not. As the cryptocurrency market keeps changing and evolving, so do the laws surrounding it.
This means that if you’re using an old calculator and not keeping track of updates, your company could be putting itself at risk when it comes time to file its taxes. You should also make sure that any calculator you use is compatible with Australian laws (or whichever country you are from).
H&R Block Tax Accounts Calculator
H&R Block Tax Accounts is a company that offers a Crypto Tax calculator that is very simple and easy to use. You just have to plug in your purchase value, selling value, your taxable income (salary plus other income, including capital gains), and then finally whether you’ve held the asset for 12 months or longer.
The company offers additional services like an in-person, over-the-phone, or email service that guarantees you a maximum tax refund. They also allow you to do your taxes online with an expert in a one-on-one session so that you can learn to do your own taxes with the help of an expert.
CryptoTax Calculator
The three main taglines on CryptoTax’s website claim that they are experts at “solving crypto Tax for Aussies”, that they “Support ATO Tax Guidelines”, and that the service “Covers NFTs, Defi, & DEX trading.”
CryptoTax boasts the ability to integrate more than 600 wallets and exchanges, having more than 100,000 users, and over 150 million transactions. The service is backed by well-known names like AirTree, Coinbase, and 20VC.
There are three easy steps that you need to follow to do your taxes using CryptoTax. You can directly upload your data in a CSV file or API integration. Furthermore, the tool helps you categorize your transactions from DEX trading and staking rewards to your participation in ICOs.
Finally, you can generate a detailed report that gives you a thorough breakdown of all realized capital gains and income.
You can get started for free but will need to pay to unlock more sophisticated services like NFT and Defi support.
What are Personal Use Assets?
A personal use asset is an item that you own for your personal use. This can include items such as:
- Cars, boats, and other motor vehicles
- Recreational equipment such as golf clubs or skis
The market value at the end of each financial year is the price that a willing buyer would pay to purchase your personal use assets from you in an arm’s length transaction without any discount or rebate being applied. The cost base is defined by two factors:
1) What you paid for it
2) How much depreciation has been built into its value over time
In most cases, crypto is not regarded as a personal use asset and is included in capital gains tax CGT or income tax, thus, it is taxable according to the laws of capital gains in Australia.
What if I Have a Capital Loss From My Crypto Trading Activity?
You may have a capital loss from your crypto trading activity. If so, you can use it to reduce your taxable income in future tax years (against future capital gains).
- Capital losses can be carried forward for up to 12 months (but not more than 18 months), and then they are extinguished.
- In addition to being used as a deduction against other income, they’re also available as offsets against capital gains made on the sale of other assets such as property or shares.
If you’re a cryptocurrency trader, it’s important to understand how capital gains tax works. This will help you plan your trading activity accordingly.
You can also use the capital losses to offset any capital gains you’ve made on other investments, such as shares or property. For example, if you bought $10,000 worth of Bitcoins in 2018 and sold it for $9,000 in 2019, then your capital loss would be $1,000 (minus any fees). In this case, if you had no other income or gains in 2019, you could apply that loss against the income from your day job.
Tax on Lost or Stolen Crypto
If you lose your crypto, you can claim a deduction for the full amount.
If you lose your crypto through hacking or fraud, however, this is not possible. You will only be able to claim a deduction for any losses up to $0.5 million (or 5%). After this point, all remaining funds will be considered income in year one and taxed at 22%.
If your cryptocurrency was stolen by an unauthorized third party (for example someone who stole it while they were using their phone), there’s no way to recover these funds without paying taxes on them!
Tax on NFTs in Australia
There are so many ways that NFTs can be taxed in Australia that it would require a separate article to explain all the intricacies. When talking about taxes, NFTs can come under four different categories.
NFTs as a Personal Use Asset
If you buy an NFT as a personal use asset, it means that you did not buy it to profit from it, but you bought it to collect memorabilia, as digital art for your collection, or to gain access to an event or a service. An example would be buying a gamepass in the form of an NFT.
NFT as Capital Asset of a Business
If you are buying an NFT for your company, it comes into the category of income tax. The process is usually concerned with minting instead of direct purchases, e.g. a company could mint NFTs as game passes to sell to players and make a profit. This would directly put the NFTs in the capital gains category.
NFTs as an Investment
If you buy and hold an NFT and it increases in price over time, it is included in capital gains. If you trade NFTs, that also counts as a taxable event. Even if you initially bought an NFT for personal use, and later sell it at a profit, it also comes into this category by default.
There are some exceptions to the capital gains tax rule, however. If you hold the NFT for more than a year, you get a 50% discount on the capital gains tax. If you’re using the super fund, you get a 33.33% discount. If you incur a loss, there is a capital gains tax levied on it. And finally, if you mint your own NFT, there is no tax on doing that.
Tax on Crypto Gifts and Donations in Australia
What is a Crypto Gift?
A crypto gift is all types of crypto transactions from one person to another. It includes both cash and property and can be made in any form including cryptocurrencies, tokens, or smart contracts on the blockchain.
How much of a Crypto Gift can be tax-free?
You can claim all your crypto gifts as income for the year they were received by you, even if they exceed $10,000 in value (the ‘tax-free threshold’). You don’t have to keep receipts or other records for these transactions but if you do, then make sure that you keep them safe so that at least one copy remains after all your other documents are shredded!
Is There Any Tax-free Crypto in Australia
Is There Any Tax-free Crypto in Australia?
There are a few obscure investments you can make in crypto that will not incur any taxes. They come under personal use assets if you don’t purchase them with the intent of trading or profit, but just want to hold them for personal use.
You need to declare the value of your cryptocurrency when you file your income tax return (ITR) each year. This will help determine whether you need to pay any capital gains tax on these crypto trades and investments or not (assuming they were purchased with cash). You will also need to keep records of all transactions relating to these types of investments so that you can claim them on future ITRs as well if required by law when filing for Goods and Services Tax (GST) refunds later down the road; otherwise, there will be penalties imposed for non-compliance!
How Do I Get Ready For the Next Tax Season?
If you’re hoping to avoid paying the taxman this year, it’s important that you keep your crypto transaction data up-to-date. You should also make sure that all receipts for any purchases and sales are saved so that they can be included in your tax return.
-You will need to keep records of all transactions made on exchanges, including those made with fiat currency.
-Always make sure that you have a receipt for any purchases and sales. This includes cryptocurrency purchases made with cash or through credit cards.
-If you’ve made any trades, you should have records of those transactions. These include the price at which you sold or bought your cryptocurrency, as well as the date on which it was purchased and sold.
There are Some Basics that Every Australian Crypto Trader Needs to Know About Paying Taxes on their Crypto
If you’re an Australian crypto trader, there are some basics that you need to know about paying taxes on your crypto. You need to know about capital gains tax, which is a tax on the profits made from selling or buying an asset. Capital gain is also known as “capital appreciation” because it refers to how much value has increased in relation to what was paid for something, or vice versa.
Capital gains in Australia are calculated based on two factors: how long someone owned their crypto asset; and whether they sold it at all before they received their payment from selling it later on down the track. This can be conducted either immediately after purchasing or at some other point later, depending on when exactly those transactions occurred within each year’s cycle.
You also need to understand if your crypto trades may actually fall under income tax and need to be included in your ordinary income tax statement.
Final Thoughts
The development of crypto taxes in Australia has been slow, but the government is steadily getting people to pay capital gains taxes on their crypto. Crypto taxes on capital gains and crypto assets have been increasing over the years as government reforms its capital gains tax, CGT, to increase its income tax earnings by getting crypto traders to pay tax. With how things are changing and how quickly, it is possible that all crypto income might be included in a separate crypto tax report altogether. Potentially, capital gains tax might also increase overall. However, since the Australian government obviously uses these taxes to make the country a better place, taxes should be paid to ensure stability and prosperity.
FAQ
Most frequent questions and answers
Cryptocurrency in Australia is subject to a progressive income tax rate on capital gains at market value. The tax increments at different income slabs include a fixed component and a percentage rate that increases for each slab.
Yes, you have to declare the value of your crypto assets in your tax returns in Australia. The declared value should be equal to the current market value of the crypto assets at the time of filing the returns.
Despite what others might tell you, there is no legal way to avoid crypto taxes in Australia. However, you can always reduce taxes by writing expenses related to traveling and consultancy for your crypto tax affairs. It’s also a good idea to hold your crypto assets for 12 month before selling them. Doing this means you have to pay capital gains tax at a reduced rate.
Yes the ATO can track your crypto holdings. They do this by using data-matching programs and services. These activities ensure that no crypto transaction in the country goes unnoticed. The ATO will issue warnings to the relevant authorities on any of your crypto investments.
Yes, the ATO already knows when you are trading any kind of cryptocurrency. This is due to their detailed data-matching programs.
Yes and no. While CoinSpot is obligated to provide transaction data to the ATO, it does not provide complete tax reports. Users are advised to fill out their tax forms by themselves in accordance with Australian law.
The ATO taxes crypto as a capital gains tax asset (or a CGT asset). This is similar to assets like land, a share in stocks, or units in a mutual fund. We can also say they are taxed like self-managed super funds (SMSFs).
You get a warning to explain the shortfall. Failure to pay the required tax amounts will incur a penalty of up to 75% of the tax liability, and interest on the remaining amount if not paid on time. In addition, other ATO laws are applicable and any kind of tax evasion or tax fraud will carry a sentence of up to 10 years in prison. If you are an American citizen, you must file your crypto taxes with the IRS.
Crypto started getting taxed in 2014 when the IRS issued Notice 2014-21, (2014-16 I.R.B. 938PDF).
Tax obligations on crypto were implemented in 2014.
Yes, Binance reports to the ATO. It is an AUSTRAC-registered business and it is liable to share KYC information with the Australian Taxation Office to ensure tax compliance.
Yes, you still need to include the crypto assets in your holdings. Even if there will be no income from holding them, the market value may change and capital gains may apply when calculating income taxes.
Capital gains tax on crypto in Australia ranges from 19% (on amounts in excess of $18,000) to 45% (on amounts in excess of $120,000 along with a fixed amount) on crypto gains exceeding $180,000.
If you transfer crypto from one wallet to another, it does not count as capital gains. As such, sending crypto in this way is not a capital gains tax event.
No, you will only have to pay taxes according to the net capital gain on your holdings once you sell or swap the crypto asset. The capital gains tax rate will apply accordingly.
Since it is treated as an asset, you have to report small gains in cryptocurrency. This is important in the US, where the IRS requires you to fill out a form (1099-MISC). The income is reported as “other income.” In Australia, this capital gain is not a taxable event.
The amount of taxable crypto gain varies by country. In America, the amount is small (about $600). In Australia, the tax threshold is much higher. For example, if your earnings are less than $18,200, there is no capital gains tax. Any amount over this figure is subject to tax reporting and you will be liable to pay taxes. As the net capital gain rises, you have to pay tax at an increasing rate.
No, MetaMask does not provide ATO with any direct transaction information, so ATO cannot directly track it. However, every transaction conducted through MetaMask generates a transaction ID. Every transaction ID is tied to a crypto asset and is basically a hash of characters. This can be used by other services to match specific transactions. Combined with matching services that track this data from other blockchains, DApps, and banking services, the ATO can link your transactions to your bank accounts. You can also use your MetaMask transaction history to make crypto tax reports.
The simplest way to calculate crypto capital gains tax is to gather all your crypto transactions. You can find your crypto transaction data and history in a single file and run it through a crypto tax calculator application or website. A tax calculator will help you generate relevant capital tax gains CGT reports. If you do not know how to do this, consult a tax accountant for advice.
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