Crypto Investor - Tax Implications
written by Nick Christie @ Kova Tax
Description
The profile of an investor is an individual or entity that is intending to build wealth through long-term capital growth, or by receiving regular dividends and payments from investments. An investor holds any given asset for an extended period, typically 12 months or greater to take advantage of the available CGT discount. There is a fine line between being considered an investor and being considered a trader, and the tax implications between the two are great. If you think that you are trading in a business-like manner then you should check our article on Digital Asset Trading.
Telltale Indicators
Your intent is to generate wealth through the long-term holding of assets
You generate income from dividends or other regular payments from the investment
Your trading activity is low volume and irregular
You do not regularly monitor, check or adjust your investments
If you are an investor, then you must be aware of the tax implications of owning CGT assets. In highly volatile asset classes such as cryptocurrency, it is critical that you do proper tax-planning to make sure you are not left with a tax bill that you cannot pay.
Implications
> 12 month, 50% CGT discount
Cryptocurrency is treated as a capital gains asset
Fees and related expenses are indirectly claimed
Tax-planning is critical
Net losses are offset against future capital gains
Crypto investors can use crypto tax software such as Syla to record their transactions, optimise for lower tax and prepare a crypto tax report. Our accounting team at Kova Tax, can assist if you need help or have a more complicated crypto activity.
Kova Tax are specialists in the cryptocurrency taxation and accounting space. When you work with us, you are working with an accounting firm that actually understands cryptoand understands how to talk your language. We are passionate about taxation and work diligently to understand each of our clients on an individual basis. Our goal is always to ensure the best outcome for you and bring certainty to your investment activity.