Tax/accountant/solicitor specialising in cryptocurrencies

Does anyone here know of any tax, accountant or solicitor who understands and specialises in cryptocurrencies. Would prefer brisbane based but seeing how new and specialised this field is am happy for any contacts nationwide.

Also looking for a brisbane based solicitor or accountant who specialises in international taxation and international investment/company vehicle structuring.

 

I would start with tax advice. Its probably simple. If it needs further advice then it will be evident.

 

Thanks Paul.

Another quick Q. How is tax treated if you trade between coins but not converting to AUD first, ie buy ethereum using bitcoin?

 

Similar to trading anything. Tax on the profits

 

its an interesting issue at the moment. ATO doesn't consider BCH or BTC or ETH to be "currency". I disagree with that view but its the ATO view at present (even though the logic is flawed with one of the Governors of the RBA calling it "currency" the other day).

so at present you wouldnt be considering the foreign currency translation rules but the interaction of conversion to AUD and then CGT rules.

So at the moment ATO considers it a CGT asset.

 

The ATO reasoning has some merits (and some disagreement.)

Currency has one notable feature Bitcoin lacks. All currency has a rate at which it is fixed. For many currencies its the USD eg the AUD. Or one of the primary currencies eg USD, Yuan, GBP, Euro. Bitcoin has its own value that is unrelated to any currency value. It keep rising in all currency related terms. That is a very powerful argument against bitcoin being a currency. There is no market whatsoever at which 1:1 parity occurs. The fact that some "coin" has been produced is not a powerful argument to say its money. Using that definition a diamond or even a lump of coal could be classed currency.

Bitcoin also lacks a central exchange traded market other that those created by or arising from its creators. Currencies have a market generally offered by a central central bank or use a indirect basis using another currency as its base eg AUD v USD.

The third is a real controversial one. It relates to how bitcoin is created. In theory it is mined by doing specific tasks for a fee to create it. However thats subject to no tangible evidence about the limits on creation. It could be possible that bitcoin can be created with a unlimited volume and acquired on the belief of scarcity which is false and thats an element (unproven or disproven) of the ponzi scheme argument. However many detractors rightly point to central banks who print currency with or without market controls.

The fourth element is one of criminal conspiracy and its greatest threat. Bitcoin was created for use for illegal transactions on the darkweb. Its issue may have criminal elements but this is unproven. Interesting that issue became one of its strengths. The US Justice Dept siezed SilkRoad bitcoin and had Treasury sell it at public auction with no concern.

Therefore at present crypto's are considered a CGT asset comprising rights. A right that can be exchanged for currency or converted to a currency based on exchanges.

 

If I mine bitcoins, can I deduct expenses (electricity, hardware, internet)?

 

No.

You would need to do so for an income producing purpose as an element of a business and not incur a loss. ATO would argue you arent conducting a business unless the scale is sufficient. When / if you did then the costs would be very limited to those directly attributable to that effort.

The use of the bitcoin mined would be important. If it was used to pay a personal expense the treatment is very different to bitcoin held as trading stock.

 

A disposal of Eretherum and an acquisition of bitcoin. Two CGT transactions. One CGT event (the sale). Depends if its a personal use asset or not.

 

Just to clarify...
For example, I buy 5 computers for mining to produce income (Antminer S9, 3000 USD each). I use electiricity (5 * 24 * 1400W = 168KW per day + some for cooling). Assume 5 computers produced 4 bitcoins (in total) over 12 months, after that all computers are recycled. Finally, all produced bitcoins are sold (95K AUD, today price). Profit = $95K - $15K (electricity) - $20K (hardware) = $60K.

So, will ATO consider that activity as business and can I deduct rent, electricity and computer costs? In other words, what is taxable income here, $95K or $60K?

 

Paul you obviously havent seen the electricity costs involved in mining bitcoin. I have a client who generates about 30k aud a month mining bitcoin and his electricity costs are scary.

 

Why is he mining? Its uneconomical due to our high electricity and infrastructure costs. Maybe he is using it as a tax offset

 

Paul, how does the ATO treat cases where you cannot prove a transaction? A lot of trades occur on decentralised exchanges with no historical data/records/evidence kept.

 

it's obvious our electricity is high, but can you prove it's not profitable? if one unit (mining computer) is profitable, multiple units are profitable as well.

 

This client is profitable.

I also didnt say where he is setup. Not australia. But a cfc yes.

 

We have heaps of clients investing in bitcoin and many who did for a couple of years. From a financial planning perspective I will not advise on bitcoin, too much liability. I wish all those riding the high ...luck, I really do. Personally, I don't get it.

Cheers Ivan

 

I have been reading that. Some fancy garage servers. Thats the confusing part - A datacentre server may use say $1k a year of power. I have no idea of time taken to mine ä bitcoin. Multiple servers sure. But then its multiple mining efforts. How long does a mining operation take to produce $1k of bitcoin ?? I guess you mine $1k of bitcoin and buy another server and so on....Sort of like the early days of google. A exponential return with exponential energy use. Perhaps ? The energy use has to be a % portion of the income however. Its like any business - Income is a factor of inputs. Get that right and profit occurs.

I'm with Ivan. Its a potential minefield (pardon the pun) when someone says even mentions bitcoin.Financial, tax and other areas. I would argue with all the hype and FOMO it may be hard to have a non profit making intention. Hard to see how anyone could see it as a CGT asset other than those who jumped in early.

I can see some poor bitcoiners getting made into test case/s.

 

Paul you mentioned how much you pay in electricity in another thread - i thought you were already mining for bit coin as it was so high.

 

LOL....I wish. I need bitcoin to pay for air conditioning at the present climate.

 

I don't know why the Aluminium smelters/steel makers don't run it as a side business.