Cryptocurrency, sometimes called crypto-currency or crypto, is any form of currency that exists digitally or virtually and uses cryptography to secure transactions.

Cryptocurrencies don't have a central issuing or regulating authority, instead using a decentralized system to record transactions and issue new units.

The ATO talks a lot about your intention.

Understanding whether you’re an Investor or Trader is critical in relation to compliance purposes and tax for cryptocurrency in Australia.

The short answer to this question is if you’re buying & selling coins regularly, you’re likely to be considered a Trader by the ATO.

On the other hand, if you’re buying & holding for periods of time, and only sell from time to time at a profit, you’re likely to be considered an Investor by the ATO, and CGT will apply.

Therefore, we recommend you keep accurate records if you sell a crypto coin at a profit.

Yes, you do.

The ATO state you must keep records of all transactions and the onus is on you to ensure they’re accurate.

That is, within crypto exchanges as well as bank account statements.

The tax office regard all transactions as taxable in Australia with only a few exceptions.

It is absolutely CRITICAL. Here’s why…

Once you’ve derived gains in cryptocurrencies, it’s too late to do much about it, especially if you haven’t organised to buy your crypto coins in a structure.

For example, if you buy $10k BTC and it goes to $50k, you’ve made the profit. You pay ALL the tax in your own name. (Remember, individuals get taxed at the highest margin rate).

Therefore, it’s crucial to set it up properly from the very beginning to make sure you keep more of your profits in your pocket.

Yes, you do.

The ATO says if you turn BTC into an alt coin or cash it into fiat, you’ll pay tax on any gain.

This is why once again it’s important to always keep clear and accurate records. Tracking your tax for cryptocurrency in Australia can be cumbersome but certainly worthwhile.

Yes, it is still possible to move your cryptocurrencies into a structure. However, tax will be paid on the transfer.

The best thing to do if you’re in this position is to speak with an expert who can go through your cryptos, work out how much tax you will pay, and tell you which ones to move into a structure and which to keep in your own name for now.

Unfortunately, as a general rule, there isn’t a lot we can do if you’ve already derived the gain. However, there are sometimes things we can do.

This is why it’s important to set it up right in the first place rather than leave it until it becomes a BIG problem.

We like to use cases such as these to help clients prepare for the future, and understand if you anticipate large profits, it’s often best to “wear” some tax, get it set up right, and know in future, you will pay a lot less.

One way is to open up an exchange account in the name of a trust / structure.

This is, however, difficult to do in practice. Plus, with a Trezor or Ledger wallet, it is physically held.

We recommend people use a mixture of a service agreement and trust minute to correctly link the cryptos with the trust / structure.

1. Make sure you’re structured correctly from the beginning. Don’t delay on this.

2. Engage an accountant who specialises in cryptos.

3. When transferring / sending money between wallets always do a small $$ test amount first.

4. It’s a very volatile market so make sure you understand what you’re doing, and the risks involved.

5. Watch out for security, phishing scams, etc.

6. SECURITY is the number ONE priority.