With tax time just around the corner, the ATO has reminded Australian crypto-enthusiasts of their responsibilities under the tax law. Essentially, crypto is considered an investment in Australia, just like shares, and any profits attracts Capital Gains Tax (CGT). CGT is pretty hefty so expect your profits to be eaten away by the taxman!
As crypto underwent such a huge 'growth-spurt' this financial year, particularly in December, the tax office will be keeping an eye on any unusual fiat deposits from know crypto exchanges.
The exception to this rule is if the cryptocurrency is used to pay for goods and services. Currently the town of 1770 in Queensland is opening up to accepting a variety of cryptocurrencies, and these types of transactions do not attract CGT. Assumedly, this is because you are paying for goods and services and therefore stimulating the economy through your profits. So the question is then, should I use my crypto profits to pay for bills or other goods to avoid CGT?
Apparently this is ok up to $10,000 per financial year and then CGT comes into play. Cashing any cryptocurrency back into fiat/cash will attract CGT.
The tax laws in Australia are very complex and as crypto is a relatively new revenue stream for people, there still seems to be a certain level of confusion when it comes to the tax law that surrounds the 'Magical Internet Money'!
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