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The Complete Guide of Crypto Tax in Australia 2022

It is said that the Australian Tax Office will be paying a close eye to cryptocurrency-related transactions than before. It is estimated that ATO will be delivering more than 400,00 letters warning the Australian cryptocurrency investors who use the cryptocurrency exchanges such as CoinSpot. Even the assistant commissioner of ATO has said they have obtained all the information and they only wish that people follow the rules.

Navigation of the tax code and playing by rules is very stressful and overwhelming and has increased the demand for crypto accountant. However, one can study the crypto tax 2022 guide to make the entire procedure feel simpler.

Individuals Need To Pay The Crypto Tax 2022 on Cryptocurrencies?

Yes, ATO considers cryptocurrencies to be a form of property and hence is subjected to capital gains and income tax.

Capital Gains Tax (CGT)

Capital gain taxation arises only when the cryptocurrency is disposed of. This happens when the crypto is sold, traded for another cryptocurrency, gifted, or used for further purchase. Capital gain is the difference amount of the AUD value of the currency at the time of sale to the time when it was acquired. It is necessary to keep the records of all the capital gain events for the five years after the occurrence of the event.

Capital Gain = Value of currency at the time of sale – Value of currency at the time of purchase

Income Tax

Income tax applies to all the cryptocurrency that is earned. It can be through mining, job, staking, or any other means. Income tax is imposed on the fair market value of coins earned.

What Does The ATO Know About Cryptocurrency?

The ATO has all the data and information of crypto transactions when the currency is bought, sold, or held with the Australian Designated Service Provider. All the Australian exchanges and wallets abide by the government Know Your Customer laws which mean that the ATO has an access to all information provided by you while signing up for the services. Hence, they can easily identify all the transactions made by an individual and even send a warning letter.

Trader vs Investor

Cryptocurrencies are taxed differently by investors and traders. Investors need to pay capital gains tax while the trader pays the income tax. However, in certain specific scenarios, it can be possible to be both an investor and trader. Say, for instance, a businessperson owning the crypto mining business and possessing a personal crypto investment fall in this category. Hence, all the transactions need to be reported separately and accordingly. Hence, it is better recommended to keep the trading and investment wallets separate to avoid any sort of confusion while lodging the tax returns.

How Much Capital Gain Tax is Imposed?

The amount of crypto tax Australia imposed is dependent on the income levels of the current tax year. The tax slab is mentioned below,

Australian Resident Tax Rates 2021-2022

Income thresholds Rate Tax payable on the income
0-$18,200 0%   Nil
$18,201-$45,000 19%   19 cents for each $1 earned above $18,200
$45,001-$120,000 32.5% $5,092 plus 32.5 cents for each $1 earned above $45,000
$120,001-$180,000 37%  $29,467 plus 37 cents for each $1 earned above $120,000
$180,001 and over 45% $51,667 plus 45 cents for each $1 earned above $180,000

Is It Necessary To Report The Capital Losses?

When the cryptocurrency is sold at loss, it is necessary to report them on the taxes. These losses can help to reduce the net capital gains tax for the year and the overall tax liability.
Make a note that the capital losses cannot be used for reducing the income tax. However, the net capital loss can be put to use for offsetting the capital gains in the future year adding to the advantage.

Lodging The Crypto Taxes

Do you know how to lodge the crypto taxes? Well, if not here is what you need to get started with.
What do you need to calculate the crypto tax bill? For accurate calculation of the tax return, you need three basic information,

  • Dates of every individual crypto transaction made
  • The market value of every asset both at the time of sale and at the time of purchase
  • Amount of every coin sold

Ways of Lodging The Crypto Tax Australia

There are three different ways of lodging crypto taxes. This includes,

  • Manual lodging: Any individual can lodge their own taxes. However, it is a time-consuming and difficult task to keep a track of the market value of each crypto asset both at the time of purchase and sale.
  • Crypto tax software: Making use of the tax software like CoinLedger helps to integrate the entire transaction history from the exchanges such as Binance, CoinSpit, and Coinbase in just a couple of minutes. All the necessary gains, losses, and income-related reports can be generated to be used for tax reporting purposes.
  • Tax software and accountant: Instead of taking the hardship of filling the taxes by yourself, one can send the gains, losses, and income report downloaded from the CoinLedger to the accountant. They can further lodge the tax returns.

What if I Do Not Have Any Money To Pay For My Cryptocurrency Taxation?

In the bull market, many cryptocurrency enthusiasts get stuck in unfortunate situations where they are not able to afford the taxes on their capital gains and incomes. The good thing is that you can still pay the taxes while staying compliant with the Australian tax laws. Any individual or business owing an amount less than $100,000 as tax amount can set up some payment plans with ATO and then pay off their bills in the installments as per convenience.

Hence, make sure to follow the tax code and avoid tax on Crypto Australia penalties in the future to ensure you are not paying more than your tax liability.


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