Cryptocurrency, commonly abbreviated to simply ‘crypto’ is defined as digital currency that can be used to buy goods and services, backed by strong cryptography to secure all online transactions.
Since its inception in 2009, dozens of cryptocurrencies have emerged and many countries across the globe are trying to find ways to regulate such a decentralised digital asset.
Contrary to popular belief, tax applies to cryptocurrency, with the Australian Tax Office viewing cryptocurrency as property and a Capital Gains Tax asset for tax purposes.
Want to know how you can legally and successfully reduce tax on your own cryptocurrency?
Find out how the team of Gold Coast tax accountants at Crest can help you with your crypto tax through the information provided below.
1. Holding cryptocurrency for more than 12 months
The normal capital gains rules apply, such as the 50% Capital Gains Tax (CGT) on the net capital gain, for cryptocurrency held for more than 12 months.
This is because the ATO recognises cryptocurrency as an asset.
What does this mean?
If you are classified as a ‘crypto investor’ (someone who obtains and holds onto cryptocurrency for an extended period of time with the end-goal of securing a long-term gain), you can take good advantage of this rule.
2. Consider your reductions
Upon commencing investing in cryptocurrency, you can potentially deduct some items on your tax return.
- Trading and education courses that are explicitly related to cryptocurrency
- Cryptocurrency related subscriptions.
3. Seek professional advice from a taxation expert
Taxing cryptocurrency is still a relatively developing and understandably complicated area.
Thankfully, you don’t need to work out the ins and outs, do’s and don’ts, risking penalties along the way in your quest for cryptocurrency tax compliance.
Instead, reach out to Crest Accountants for comprehensive, cryptocurrency tax solutions.
Our in-house Gold Coast crypto accountant, Justin Fahey, ensures we all stay up to date with the latest in the cryptocurrency world and allows us to pass on our industry-specific advice to you, our valued client.
4. The existence of available capital losses
Do you have available capital losses?
Losses realised against cryptocurrencies that have decreased significantly in value, can be utilised against existing capital gains.
Why is this important? This can potentially go a long way in reducing any cryptocurrency capital gains earned.
Discover what this means for your cryptocurrency tax by speaking with and working out compliant tax reduction strategies with your trusted Gold Coast accountant.
5. Don’t forget to disclose all of your cryptocurrency activity
Just because cryptocurrency is decentralised and still somewhat regarded in its infancy, it doesn’t mean you should run the risk of avoiding activity reporting.
The nature of blockchains (making it difficult or impossible to change, hack or cheat the system) means that all transactions leave behind a digital footprint.
When you choose not to disclose your cryptocurrency activity, you risk very real and severe penalties and interest charges from the ATO.
Don’t want to accidentally miss reporting some or all of your cryptocurrency related activity?
Crest Accountants, your Gold Coast accountant is ready and able to assist.
Need help with cryptocurrency tax planning?
Contact Crest Accountants today for personalised tax advice, planning and effective implementation strategies.
Disclaimer: The information contained in this news post is general in nature and is intended to provide a general summary only and should not be relied on as a substitute for professional advice.