Bitcoin, Ripple, Litecoin, Zcash, Primecoin - nothing typifies the fast-moving nature of the digital landscape better than the rise and rise of cryptocurrency.
But what is it? Cryptocurrency is a digital asset designed to work as a medium of exchange that operates using decentralised control (eg user to user payments, with no central authority or third party involved), as opposed to the centralised electronic money used by our banks. Cryptocurrency values have skyrocketed and are changing every second, 24 hours a day, every day of the year. As if tax was not complicated enough, investing in cryptocurrency adds another level to your end of year compliance. We can help with this though! What are the tax implications of cryptocurrency? The starting point is to determine whether transactions involving cryptocurrency are on capital or revenue account. The tax outcome will generally depend on whether: 1. The cryptocurrency is held as trading stock 2. The cryptocurrency is held as part of a profit-making undertaking 3. The cryptocurrency is held on capital account and is classified as a personal use asset 4. The cryptocurrency is held on capital account but is not a personal use asset The tax treatment applied could have a massive impact on the taxation payable. It is important to have the correct records to support your tax treatment, and have clear evidence of what your initial intention was. What is the ATO’s current approach to cryptocurrency? The ATO has set up a taskforce to look into tax issues relating to cryptocurrencies. They are believed to be working with Australian banks and Austrac to assist in tracking money flows stemming from cryptocurrency investments. The ATO is also seeking advice on how they will tax cryptocurrency transactions and determine tax liabilities. If you need taxation advice regarding your Cryptocurrency transactions we are here to help. Contact our office on 9791 5877 to find out more.
1 Comment
26/8/2019 03:43:35 pm
Thanks for the information about call centers. It is always great to read about this ever changing industry.
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