INTHEBLACK November 2021 - Magazine - Page 27
STORY GARY ANDERS
T H E A U S T R A L I A N TA X AT I O N O F F I C E I S W O R K I N G H A R D T O
S H AT T E R T H E M I S C O N C E P T I O N T H AT C RY P T O C U R R E N C Y
G A I N S A R E E X E M P T F R O M TA X O R TA X A B L E O N LY W H E N
C AS H E D B A C K I N T O D O L L A R S .
TAXING
CRYPTO
O
n paper, the capital gains are nothing
short of staggering.
Over the full course of the 2020-2021
financial year, anyone with a stake in the
cryptocurrency Bitcoin would have seen the value of
their holding surge by more than 250 per cent.
After starting the last financial year at about
US$9146 (A$12,409), the closing price for one
Bitcoin on 30 June 2021 was US$35,040 (A$47,544).
Yet, savvy Bitcoin traders could have achieved a
much higher cash profit of more than 600 per cent
last year.
That’s the gain based on having bought at the
financial year’s low point of just over US$9000
(A$12,000) in July 2020 and then having sold at
the crypto’s peak of almost US$65,000 (A$88,000)
in mid-April 2021.
Even better than that, those holding another
cryptocurrency called Ethereum could have booked
a profit of more than 600 per cent as its trading price
soared from US$226 (A$306) to more than US$2200
(A$2985) over the last financial year.
However, there is one big catch – the capital gains
tax (CGT).
Generally, as an investor, if you buy, sell or swap
for fiat currency, or exchange one cryptocurrency for
another, the transaction is subject to CGT and must
be reported.
Cryptocurrency gains are treated in the same way
as gains from other investments, such as shares.
The Australian Taxation Office (ATO) is concerned
many taxpayers believe their cryptocurrency gains are
tax free or only taxable when their holdings are cashed
back into Australian dollars. That’s not the case.
This is the message the regulator wants to get
through to taxpayers, as well as to accountants and
other finance professionals providing tax advice to
individuals and businesses.
intheblack.com November 2021 27