CGT when selling crypto in America?

The ATO website says :

So, now, if an individual who purchased the crypto while in Australia as a tax resident, sells the crypto when he has been away from Australia for 7 months - is on a holiday in the US - and sells the crypto in the US (using a US/Chinese exchange and probably paying US CGT, which is next to nothing) - does that invalidate all Australian CGT on crypto sale?

NB: I have no significant crypto but was thinking this could be one of the ways people who want to get around paying CGT, could actually have a 7 month holiday instead of paying CGT on crypto sale.

 

It wouldn't because they are likely to still be a tax resident here. If they ceased to be a tax resident that is actually a CGT event which a choice of paying CGT on a deemed disposal now and getting exempt for future gains, or not paying CGT and paying CGT later when sold on the whole ownership period - plus potentially taxed in the foreign jurisdiction

 

An australian tax resident is taxed on all their worldwide income at all times, whether it is taxable or not elsewhere in the world. If relevant double tax treaties may allow a credit for any foreign tax paid (if any). A person on holidays or temp absence etc doesnt change tax residency.

It doesnt matter where the transaction occurs. The taxpayer is taxed on the event, not its location. The calculation basis is the AUD equivalent of the foreign transaction.

The IRS and other agencies and most exchanges share data (sometimes indirectly through another tax agency) with the ATO
Tax treatment of crypto-currencies in Australia - specifically bitcoin

 

There is also a way to not pay CGT or tax on crypto.

Personal use asset
Some capital gains or losses that arise from the disposal of a cryptocurrency that is a personal use asset may be disregarded.

Cryptocurrency is a personal use asset if it is kept or used mainly to purchase items for personal use or consumption.

Cryptocurrency is not a personal use asset if it is kept or used mainly:

• as an investment
• in a profit-making scheme, or
• in the course of carrying on a business as all of those are taxable in some way.

Where cryptocurrency is acquired and used within a short period of time, to acquire items for personal use or consumption, the cryptocurrency is more likely to be a personal use asset.

Example
Josh pays $50 to acquire cryptocurrency each fortnight. During each of the same fortnights, he uses the cryptocurrency to enter directly into transactions to acquire computer games. Josh does not hold any other cryptocurrency. In one fortnight, Josh identifies a computer game that he wishes to acquire from an online retailer that doesn't accept the cryptocurrency. Josh uses an online payment gateway to acquire the game. Under the circumstances in which Josh acquired and used the cryptocurrency, the cryptocurrency (including the amount used through the online payment gateway) is a personal use asset.

However if Josh holds crypto as he feels it may increase in value to assist him to buy more costly games and a racing console then it wont be a personal use asset and it is a CGT asset. Josh wouild face tax on the increased value

 

It's easy to become a tax resident in foreign jurisdictions but difficult to get out of it. If extended travel is on the cards then you need structuring advice. @Terry_w is a wizard in this area.

 

Extended "travel" most usually doesnt impact Australian tax residency at all.