The #1 Myth About Crypto Tax
Crypto myth #1: “I’ll only pay tax when I convert it to Australian dollars”
Cryptocurrency is like a currency. You’re not going to get taxed until you take it back out completely to Australian dollars.
The timing of the tax event (or when you get taxed), is when you dispose of that asset or currency. So, if you sell Bitcoin back to Australian dollars, that would be a potential taxing point. But if you sell Bitcoin into Ethereum or any other coin, then that would be a tax event as well.
If you sell services, run a business, and you’re paid in Australian dollars normally, but you get a bill paid in Japanese yen, then you will still need to pay business tax. You can’t avoid it because you haven’t taken it out in Australian dollars.
Download a FREE copy of the Cryptocurrency Tax PDF at https://info.inspire.business/cryptocurrencytax
https://youtu.be/tYkB-6PmK5I
Tax Warning For Crypto Hobbyists
CRYPTO MYTH: “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’s kept or used mainly to make purchases of items for personal use or consumption. You might hold a very small portfolio of Bitcoin, Ethereum, or whatever it is, and use that to buy clothes, music, and games. But not to buy, sell, trade, or invest.
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- It is not a personal use asset where: Its intended use is to purchase income-producing investments; or
- You intend to keep it for a number of years with the intention of selling it at an opportune time based on favourable time. So, you basically make money off a sale of it.
Watch the full webinar, ‘Cryptocurrency Tax Masterclass’ at https://fb.watch/acHFQ4OHBc/https://youtu.be/IEO48ZYE75Y
Don't Make This Crypto Mistake
Crypto Myth: “I don’t have to pay tax because the ATO will never know about my portfolio.”
We kind of get that there is some level of anonymity but the ATO is onto this. Some of them aren’t incredibly helpful but in general, they’re not Muppets when it comes to taking as much tax as they can off our hands.
Mr. Loh (ATO) has said:
- “We’re alarmed that some taxpayers think the anonymity of cryptocurrencies provides a licence to ignore their tax obligations.”
- “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 as well.
Keep in mind that if you are stressed because you’ve tried to hide this stuff, then that is a tax on your health.
Watch the full webinar, ‘Cryptocurrency Tax Masterclass’ at https://fb.watch/acHFQ4OHBc/
Crypto: Capital Vs. Revenue Accounts
Another key tax concept when it comes to crypto, is your profit or what you earn on a revenue basis, a capital basis, or a capital account?
Money you receive is treated either as revenue account, or ordinary income.
In terms of Revenue account:
- Normal ‘business’ income – If you run a business, this is
what we do day-in day-out, and what we look after. - Trading income – If you’re doing trading, including bots, where your punching out transactions, that is on a revenue account, that’s not capital gain.
- Mining income – In a way of profit intention where you buy assets, graphics cards, and asset minors. And your intention is to earn a profit from offering your computer resources to the cryptocurrency world.
- Income from staking – The idea of staking is almost like earning interest on your value of your cryptocurrency. That is also on a revenue account, and with revenue.
- Your tax is paid on the income, less the expenses to derive that income – So there’s no discounts on that.
What happens if you do a mix of them, do you trade or hold?
You can treat different portfolios separately, where you’ve got sort of a trading portion of it, and you’ve also got your long term holds as well.
In terms of Capital account:
- HODLing (hold on for dear life) – Buying and holding for the long-term. That is on the capital account and it’s a different set of rules that you are taxed on.
- If your intention is to profit over time on an eventual sale.
- You’re allowed a discount on gain if it’s held over 12 months.
For individuals – If you’ve got a portfolio in your own name, and you fall under this capital account, and you’ve held your investments for more than 12 months, then you are entitled to a 50% discount on your sale of those assets. - The tax is paid on the sale value, less the cost base, adjusted for any discounts.
Want to learn and watch more about cryptocurrency tax?
- Watch the full webinar recording ‘Cryptocurrency Tax Masterclass’ on our facebook page
- 6 Tips To Reduce Your Crypto Tax
- Tracking Crypto Transactions For Tax
- Tax Warning For Crypto Hobbyists
- Can You Delay Crypto Tax Bills?
Watch Video: Tax Rules For Business Structures
Can Your SMSF Invest In Crypto?
CRYPTO MYTH: “My SMSF cannot invest in crypto”
If you have a self managed super fund, there are no laws preventing an SMSF from investing in cryptocurrency.
But keep in mind that if you are going to do this –
- You must read the trust deed – Trust deed needs to allow an investment in digital currencies or cryptocurrencies. Your trustees of your super fund may be able to amend your trust deed to include it.
- The investment must meet the ‘sole purpose test’ – You can’t invest in crypto and get benefits outside of super, because you’ve invested in through your SMSF.
- You cannot acquire crypto from a related party – Think of your immediate family members, your extended family, or any companies of trust you hold outside of super. You cannot buy it from them. Keep in mind that for NFTs as well.
- Need to consider it in the investment strategy – Part of the running of an SMSF is to make sure your investments fall within the funds investment strategy. It’s a document you can prepare and update as you need to so it can change.
- Need to be ‘owned’ in the SMSF – ensure correct names on exchange accounts, wallets, etc.
- Keep a very good record. Your SMSF is audited!
Can you put a hundred percent of super in cryptocurrency?
Keep in mind that cryptocurrency is very high risk. Your investment strategy needs to include considerations for an appetite to risk and it may be way too high risk to have a hundred percent on there. That doesn’t mean there’s any legislation stopping you doing that.
Watch the full webinar, ‘Cryptocurrency Tax Masterclass’ at https://fb.watch/acHFQ4OHBc/
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Can You Delay Crypto Tax Bills?
Unfortunately, the answer is not favourable to what you are hoping for.
Keep in mind that 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.
“Is buying an NFT disposing your Ethereum?”
Disposing your Ethereum is a taxing point. And buying an NFT is your cost base of that NFT or your purchase price. So, we need to look at that separately.
Watch the full webinar, ‘Cryptocurrency Tax Masterclass’ at https://fb.watch/acHFQ4OHBc/
The 1st Step Of A Killer Digital Strategy
We recently invited Jon Hollenberg founder of Five by Five on the webinar topic ‘How to create a kickass website (that actually works) Here’s what he said about the first step of a killer digital strategy –
From a client engagement perspective, this is where we really dig into the client. We try to understand who they are, what they do, who they’re doing it for. So, understanding the client’s client and forming up a really detailed avatar as to who they’re serving out there in the world.
What does the product ecosystem look like? So, how does someone sort of move through the different products in your business? How do you engage with the client, what does that actually look like from start to finish? How you actually put dollars into a bank account.
It might seem a really simple thing but this is where we dig into all this sort of stuff. Average dollar sales and margins. If you can understand it, then it really becomes just a mathematics and a numbers game to say, “Well, I need X amount of leads at X amount of conversation rate and X amount of retention, and I can grow and scale my business.” So, the outcome is just partnering with someone that ultimately just gets to know you and your business.
Watch the full webinar recording ‘How To Create A Kickass Website That Actually Works’ on our Facebook page or Book a FREE Strategy Call with an Inspire Accountant today.
3 Benefits Of The BAC Grant
On a recent webinar, we invited Michael Dunne, co-founder of Epic Sales Group to talk to us about the 50% Wage Subsidy for Eligible Employees. Here’s what he said about the benefits of The BAC Grant –
The 3 big ones are:
- Upskilling the team in your business.
- Personal development in your team. So, you can get your team excited because they are gaining a qualification.
- A hefty wage subsidy that helps you to scale your business.
Some of areas that you can upskill your team and your business are:
- Marketing
- Leadership
- Logistics
- Admin
- HR
- Sales
- Project Management
- Customer Engagement
In terms of the personal team development:
- They end up receiving a diploma or a certificate, which is very tangible.
- The electives can be made and customised to the individual’s career. So, you can actually kind of sit down and work out exactly what they need and what they want out of the role.
- And it provides growth, development, variety, and a huge boost for team morale as well.
Wage Subsidy
If wage is over $56K:
- $28-32K* per FTE team member in NSW
- Up to $26K in other states after quarterly contribution
- Paid 7K quarterly in arrears.
The basic subsidy is $7,000 per quarter if the wage is $56K or over. If it was $40K, you would get 50% of that $40K. But anything over $56K would still be $28K because it’s capped at $56K.
Depending upon the state that you are in, the government training is paid for fully in New South Wales. But in other states, you will still get a hefty amount of money but it’s not quite as much as New South Wales.
Watch the webinar replay, “Accessing the 50% Wage Subsidy for Eligible Employees” on our Facebook page or Book a FREE Strategy Call with an Inspire Accountant.
6 Tips To Reduce Your Crypto Tax
- Know the rules
- Get on the front foot (don’t bury your head) – We’ve heard of people who make a lot of money and they’re just like, “Oh, I’ll deal with that later.” make sure you get on the front foot with this stuff by learning the rules and getting a good advisor around you.
- Get your structuring right – Get a structure ready before you make the investments, your mining, or whatever you’re doing.
- Do tax planning with a good accountant – Even if you’ve made a lot of money, make sure you go to an accountant who does tax planning within the financial year you’ve made that money. Because within the financial year is your opportunity to save tax. Go and see someone who does tax planning in the financial year. Here at Inspire, we do that for every single business client that we offer this tax planning service as part of the normal package of working together. Make sure you go and get advice in advance of 30 June or the end of the financial year, in which you’ve made your profit.
- Report accurately to avoid fines or penalties – If you’re trying to hide stuff, it will not end up working for you, whether it’s fines or penalties or you’ll eventually pay the tax, or you’ll be paying sleep at night tax throughout your life.
- If you’re trying to make it look like something it isn’t, then that’s when you need to be worried (i.e. capital instead of revenue for your benefit) Sometimes we want it to be capital, but it looks revenue-ish or we want it to be revenue when it’s capital. That’s the sort of situation where you have to look at it objectively because if you get audited you should have known better. “How would I know? I’m not an accountant”, is not your defence from an ATO perspective. It might reduce the penalties you get but definitely not an excuse or you won’t ever pay the tax. So please get that sorted.
Why Your Business Needs Professional Photos
We recently invited Jon Hollenberg founder of Five by Five on the webinar topic ‘How to create a kickass website (that actually works) Here’s what he said why your business needs professional photos –
What does your premises, office, or team look like? What is the process that you’ll run through from a new client engagement process? How do you deliver your product? What is the experience? How do you make people feel at the end of the day?
A lot of these can be interpreted through visuals.
Fivebyfive does this for a lot of clients. We go onsite and we partner with amazing photographers. There’s a business out of Western Sydney, they manufacture a small factory and they make bushfire shutters and screens. What this is doing is basically a tonne of visual imagery in and around their products, the teams, the process, and the manufacturing. It’s all locally supported, sourced, and supplied, engineered, and assembled all here in Australia.
The imagery is sort of simulating what is the client experience and what is the client journey look like if someone’s to come out, do a measure, quote and all that sort of stuff. Having 150 photos is super valuable because they can be scattered through your website and can be used on social media. They can be used on your marketing documents, in and able. And for the investment of $1,000 or $1,500 or whatever a shoot costs, it’s just a no-brainer.
We get so many people who are like, “I don’t want to do it, don’t want to make myself the hero,” and they’re still using stock photos and all that sort of stuff. And this sort of plays into this: You too are the brand. Whether you know it or not or whether you like it or not, you are the brand. What you’re putting up on social media, your profile picture, and all that sort of stuff, people are judging you.
Watch the webinar replay, ‘How To Create A Kickass Website That Actually Works’ on our Facebook Page. or Book a FREE Strategy Call with an Inspire Accountant today.
Get Cashed Up
