ATO Cryptocurrency Tax Guidelines

Dependent on your activities you may fall under one of four major taxation categories. The categorisation of your activity will have important implications on how your tax and accounting is handled. If you have a particularly challenging taxation situation then a private ruling from the ATO may be required. A specialist accountant can engage with the ATO on your behalf to ensure the best opportunity for a favourable ruling.

Personal Use Asset

Cryptocurrency may be a personal use asset if it is kept or used mainly to purchase items for personal use or consumption. Only capital gains you make from personal use assets acquired for less than $10,000 are disregarded for CGT purposes. However, all capital losses you make on personal use assets are also disregarded. ATO Website

Investor - CGT Rules

If you acquire cryptocurrency as an investment, you may have to pay tax on any capital gain you make on disposal of the cryptocurrency. As an investor, if you hold your cryptocurrency as an investment for 12 months or more, you may be entitled to the CGT discount to reduce a capital gain you make when you dispose of it. ATO Website

Business Purpose - Trading Stock

If you hold cryptocurrency for sale or exchange in the ordinary course of your business the trading stock rules apply, and not the CGT rules. Proceeds from the sale of cryptocurrency held as trading stock in a business are ordinary income, and the cost of acquiring cryptocurrency held as trading stock is deductible ATO Website

Trading vs Investing

An investor is a person who holds assets for the purpose of earning income from dividends and similar receipts. A trader is a person who carries out business activities for the purpose of earning income from buying and selling of assets. You can get an understanding of where you may be categorised by considering the similarities with share-holding vs share-trading at the link below. ATO Website

Not sure which category?

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