For a very long time a decade ago, the crypto asset was only one: bitcoin. Now to understand crypto assets you need to differentiate them from cryptocurrencies and digital assets.
There are various crypto asset types in the market, they are commonly known as Litecoin, Ripple, Bitcoin and Ethereum, and they operate on their own blockchain networks. Cryptocurrency and crypto assets have the same meaning, it can take two sides, the cryptographic currency or the cryptographic asset. Which ever crypto you decide to pick they are all digital assets not physical assets.
Crypto assets are a digital representation of value that you can transfer, store or trade electronically, this also includes non-fungible tokens (NFTs). When you buy, sell or dispose crypto assets in any other way, you have tax responsibility.
When you dispose crypto assets, you need to consider capital gain tax, this needs to be included a capital gain or loss in your income tax return. Disposal of crypto assets includes when you:
• Exchange one crypto asset for another
• Trade, sell, gift, or donate crypto assets
• Convert crypto to Australian dollars
In Australia, if you’re selling, trading, spending or gifting crypto as an individual (investor) the net capital gain made is paid at your Income Tax rate. Your income tax rate depends on your total income during the tax year.
A capital gain or loss is the difference in value from when you purchased your crypto to when you sold or otherwise disposed of it. If you have a profit, you have a capital gain, and you’ll pay Capital Gain Tax on that profit. If you have loss from your crypto decreasing in value, then you have capital loss and you won’t pay tax.
If you need further help of understanding of how crypto assets works and how to manage crypto assets, please contact or speak to registered tax agents such as Matovic Business Accountants.
More info on Crypto Assets: Cryptocurrency asset types – and how they’re taxed | INTHEBLACK (cpaaustralia.com.au)
Feel free to contact Lana and her team at Matovic Business Accountants if you would like to discuss further information on crypto assets,
email us at info@matovicaccounting.com.au or call (07) 3557 5721.
Leave a reply