Cryptocurrency taxes are no laughing matter. You’ve been paying them for years – thanks to the 2017 Australian government budget, it seems you’ll also be paying them for years to come. Don’t worry; read this ‘Crypto Tax Guide for Australia 2022-23’ to know it all!

Taxable income is any income your cryptocurrency holdings generate, including trading and mining. For example, if you have mined Bitcoin worth US $1000, this would be taxable income under Australian law.

How Do Cryptocurrency Taxes Work in Australia

Australian Taxation Office tax procedure of cryptocurrency depends on how it is used.

For individuals, cryptocurrency may be an investment or they could be trading it. Therefore, the appropriate action to take is to report the taxable income in your Australian tax return. The ATO accepts that people are now investing in and trading cryptocurrency. 

The Australian Taxation Office (ATO)

The Australian Taxation Office (ATO) has released guidance to clarify the tax treatment of cryptocurrency purchases, sales, and other transactions in Australia.

How Do I Know If Cryptocurrency is a Capital Gain or Another Type of Gain

You have to consider whether a capital gain or non-capital income derives from the experimental use of cryptocurrency. If so, you had likely paid tax on a capital gain when you sold; for example, if your cryptocurrency held for 12 months or more, acquired at less than its real value.

Taxes Paid on Cryptocurrency

Go to the Australian Taxation Office website and download the “Business and professional items” software. This allows you to lodge your tax return online. You will need to include the value of the cryptocurrency in this software.

Buying Cryptocurrency in Australia

Australia has no official government position on crypto’s legality and tax treatment. As such, it is not possible to trade cryptocurrency legally in Australia. However, buying and selling cryptocurrency is illegal except when there is an Australian signatory to the United Nations Convention on International Trade in Endangered Species. Therefore, possible to purchase cryptocurrency, which can then be sold for Australian dollars.

Selling Cryptocurrency in Australia

If you sell your cryptocurrency, the Australian dollar value goes out of your wallet and becomes out-of-pocket tax payable. This amount is long-term capital if you hold the cryptocurrency for 12 months or more. You will have to include this money as income on your tax return.

The Australian Taxation Office (ATO) treats cryptocurrency as an asset, not a currency or foreign currency. This is so it can be taxin the same way as stocks and bonds, rather than treating them as currencies, foreign currency, or any other tax.

Like stock investment, you pay tax when you sell your cryptocurrency; however, unlike stocks, you have to declare your gains from day one. Even if you intend to hold it for the long term.

Final Note: Crypto Tax Guide for Australia 2022

Taxing cryptocurrency differs from country to country. As such, citizens should do their due when investing in and transacting with cryptocurrency in Australia. The Australian Taxation Office (ATO) has adopted a crypto-friendly taxation approach.

Therefore, the ATO expects taxpayers to account for taxable income in Australian dollars and capital gains tax (CGT) on each transaction. However, the ATO has provided strong guidance on properly accounting for one’s cryptocurrency holdings when preparing your annual return or paying your quarterly taxes.

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