Cryptocurrency Tax Accountant

Crypto Myth #1

“I’ll only pay tax when I convert it to AUD”

• Cryptocurrency is like a currency
• The timing of the tax event is when you dispose of any asset or currency
• So, if you sell Bitcoin to buy Ethereum, you’ve still sold / disposed of your Bitcoin
• If your business is paid in Japanese Yen, you still need to pay business tax even though you haven’t converted it to AUD

Crypto Myth #2

“If I make a gain, but put the money into another coin, I delay the tax bill”

• The timing of the tax event is when you dispose of any asset or currency
• Regardless of what you purchase next, you’ve still made a gain at the time of selling

Crypto Myth #3

“I don’t have to pay tax because the ATO will never know about my portfolio”

• “We are alarmed that some taxpayers think that the anonymity of cryptocurrencies provides a licence to ignore their tax obligations.” Mr Loh (ATO) said.
• “While it appears that cryptocurrency operates in an anonymous digital world, we closely track where it interacts with the real world through data from banks, financial institutions, and cryptocurrency online exchanges to follow the money back to the taxpayer.”
• Don’t forget: Your “sleep at night tax” is a tax!!

Crypto Myth #4

“My crypto is a hobby so I don’t have to pay tax”

• The ATO’s view is that crypto is personal use if it is kept or used mainly to make purchases of items for personal use or consumption (i.e. used to buy clothes, music, games etc). Not to buy / sell / trade in.
• It is NOT a personal use asset where:
  • It’s intended use is to purchase income producing investments;
  • you intend to keep it for a number of years with the intention of selling it at an opportune time based on favourable value

Crypto Myth #5

“My SMSF cannot invest in crypto”

• No laws prevent it
• Read the trust deed (or the trustees can amend it to include it!)
• Investment must meet the ‘sole purpose test’
• Cannot acquire from a related party
• Need to consider it in the investment strategy
• Needs to be ‘owned’ in the SMSF – ensure correct names on exchange accounts, wallets, etc.
• Keep a very good record. Your SMSF is audited!