Crypto and tax

Discussion in 'Accounting & Tax' started by Sakura, 20th Nov, 2019.

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  1. Sakura

    Sakura Active Member

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    Not much answers out there about crypto and tax. We'll use bitcoin as the example. If 10k was used to invest in bitcoin I understand a CGT event is triggered on sale when sold back into fiat currency. If you were to start margin trading with that original investment of 10k after holding for a year and your position eventually gets liquidated. What are the tax implication here? if there CGT involved?
     
    Sakura, 20th Nov, 2019
    #1
  2. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Crypto profits and losses may either be a revenue or a CGT issue and this is largely determined by the manner in which investment occurs, its duration and the degree of frequency etc to the trades. A passive "hold then sell" strategy suggests a CGT event is involved. The AUD value of the transactions are a complicating factor whether or not the values are repatriated or exchanged to AUD. There will be either a CGT gain or a CGT loss.
     
    [email protected], 21st Nov, 2019
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  3. Sakura

    Sakura Active Member

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    Ok, so what happens in margin trading when your position gets liquidated. So you now have zero. If the initial 10k a capital lost?
     
    Sakura, 22nd Nov, 2019
    #3
  4. mikey7

    mikey7 Well-Known Member

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    Paul, what happens for 'gifted' crypto?
    Eg. A new coin is started, and the first 100 people get 1 free coin. You sell the 1 coin for $1,000AUD.
     
    mikey7, 22nd Nov, 2019
    #4
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Cost base $0
     
    Terry_w, 22nd Nov, 2019
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  6. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Bonus issues are absorbed into the average cost. You dont have one at $0 and the others at actual cost however.

    eg 1 free + 10 for $10,000 = Avg cost of $909.09.
     
    [email protected], 25th Nov, 2019
    #6
  7. Mike A

    Mike A Accountant

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    Based on some private rulings that have been issued the personal use asset route is another thing to consider when looking at crypto. The ATO surprisingly has given some positive rulings.
     
    Mike A, 26th Nov, 2019
    #7
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