Crypto madness and Bitcoin bonanza has firmly taken ahold of the internet. It’s much like the gold rush of the 1800’s. Those who moved first will be laughing all the way to the bank and the rest will probably be left holding dust when it all crashes.
One problem of the insane profits many traders are making is taxation. Once you decide you’ve had enough, what do you do with your handsome profits? Do you declare them to Mr.Taxman? Or do you hide everything in a Swiss bank account like a 1960’s bond villain?
Wild ideas aside, if you transfer ,000 into your bank account tomorrow you’re going to get slapped at the maximum tax bracket, so you want to think this through.
We’ve spoke to accountants, crypto-gurus (if there is such a thing?) and friends of friends who know a bloke who once owned Bitcoin to understand the options further.
The good news is cryptocurrency is still kind of a grey area at the moment so you could be in luck… but this is unlikely to last forever.
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What Mr.Taxman says…
‘Bitcoin is neither money nor a foreign currency, and the supply of bitcoin is not a financial supply for goods and services tax (GST) purposes. Bitcoin is, however, an asset for capital gains tax (CGT) purposes.’
The short of this is, if you’re making profit from Bitcoin, even though it’s not recognised as ‘money’ you still need to pay tax on any capital gains, much like selling shares or property.
Jump to the Australia Business website and they are singing the same song.
‘Bitcoin and other crypto-currencies aren’t considered to be money or foreign currency by the Australian Tax Office (ATO). Instead, they’re treated as assets for capital gains tax purposes, making them more like a barter arrangement.’
Regardless, any ‘barter’ transaction must be recorded as stated by the tax office below.
Video: Cryptocurrency Tax in 5 Minutes - What are Taxable Events ?
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