Hi guys, got a question for the smart.
My brother recently lost his job at the company he works for. To make things worth he also lost about $48000 last year dealing crypto called Ripple. And to make things even worth his investment house he purchased 6 years ago is now selling about $150k less than the price he paid.
If he were to selling the investment now would he able to carry forward the loss on both failed investments? If so how many years can he carry forward for?
Thanks many
It's not an investment book, it's a book on getting your finances on track
Oh ok. I will have a look for sure. Thanks for sharing
I agree with chumlee. Sounds like your brother needs some back-to-basics help, which is what that book covers. There's a bit in there too on retirement.
@squishypiranha: Thanks, I got the book from the web, I have sent it to him. Hopefully it helps a little
Day trading and pokies .. forget about them.
Not sure if he was day trading but he certainly is trying to short the market. Which back fired spectacularly………..
If he was shorting the market how the hell did he lose money. He should be rolling in it.
Yes. If they are classified as Capital Lossess they can be carried forward each tax year until such time as they can be offset by capital gains.
PS worth = OP means worse!!!
Does this really worth it? Or is it making it worse?
He was not "shorting the market" if he thought Ripple prices would increase
More likely "catching a falling knife"
Sorry you are right, he thinks it will go up. But its keeps falling down.
I spend sometime reading a bit more about Ripple last night and I am surprised a company doing international transaction will be the next big thing. I think there are alot of company out there doing the international transaction so Ripple isnt the only one.
When I asked him last night he said a friend said Ripple will be the one. Oh well, guess his friendship needs a check.
I am way too old fashioned. I think shares are the safer option.
If was the one. Now is not
I have a query to the general Ozbargain community. Would losing crypto be allowed to be classified as capital loss? Does the trading platform take your TFN etc? Cause I haven't heard of people paying capital gains tax for making money out of crypto, or am I mistaken?
People don't want it to be an investment when they make money from Crypto, but want it to be an investment when it loses money.
Like the ATO, they can't have it both ways… generally it is an investment if you trade it for investment. If you buy Crypto to use as a means of payment, that's a different story.
So when people are buying crypto, are they registering with TFN etc at a financial institution (therefore captial gains/losses are registered), or are they putting and withdrawing their money similar to like the TAB where no such arrangement exists?
No formal arrangement.
However I don't know enough about crypto if the government can track it like most other investments.
They can't track the crypto, but they can most likely track the AUD from your bank account. But if you sell the crypto and sell it for different currencies that are put in an offshore bank account, that's a different story.
if you're trading in crypto, any profit is income, and any loss, can be used.
if you're buying crypto for the long haul, sell it and make a profit, you're meant to declare it as capital gain.
yes, you are meant to pay tax on crypto.
the ATO has been clear on this, but catching tax cheats in the crypto world is a different story.
who is actually buying crypto to pay for things??!! eye roll the only reason it exploded last year was cos of media fueled speculative gains. a gain aint worth nadda until it's crystallized.
i was slightly amused everytime i heard bitcoin fell in value from its crazy levels of last year
You are mistaken.
Any sale of crypto constitutes a CGT- event, and any gains over your initial investment has a tax associated. However, if you have long term investment- i.e., locked up BTC over an year, you would get a 50% discount.
However, if you bought BTC using Fiat (AUD) and withing the next few months bought ETH using BTC, that would constitute a CGT- event.
no mate if you "trade" in anything it's revenue. you can trade in houses and it'd be income
theres a difference of characterization of income depending on the circumstances.
i won't discuss this further
So I guess on another words, with so many people making a mint out if crypto last financial year I expect a governernment windfall?
You need to get the advice from your accountant.
The tax office provides such free advice to help you comply with the tax rules.
HODL and you never lose.
You spelled the Hodl wrong, should be Hold:)
By the way, when you say hold, you mean holding the investment unit or the Ripple? As he already sold all the Ripples.
HODL refers to holding onto cryptocurrency
Oh sorry, I didnt know.
Hold On for Dear Life
@house2015: It's basically a Reddit crypto meme.
Also in your brother's case he probably should've done so and sold at the next Coinbase rumour.
Good luck turning his loss into the publics
I don't have anything to add other than oh my God he is terrible at investing… Loss of $220k.. Does he have anything in super or is he screwed for retirement now?
This is the first time he has been in the investment area.
Before he only putting money in the UBank USaver.
So yes, he is terrible, I guess luck has a lot to do with it, who would thought house prices would come down this hard in Perth…………….
The asset is not called Ripple, it's called XRP a speculative asset used in the X### ecosystem designed by Ripple for use by financial institutions. 'Ripple' are actually doing quite well for themselves.
In any case it was a CGT event, so your friend should look up their options.
Wait a min, Ripple and XRP is not the same????? I thought its the same thing?
Oh dear, what did he invest in?????
I better check with him first, I would hate to see him investing in the wrong Crypto. Pretty sure he invested in Ripple and not XRP.
I will double check and update later
Yeah nah
Ripple and XRP are synonymous. Ripple is the software company that created XRP the crpyto.
Sorry to hear about your bros loss.
Just thinking though.
If your bro has such a large capital loss, couldn’t you lend him some money to invest in Telstra shares. As he won’t have to pay for any cgt on it due to the carrier over losses.
He is not longer interested in any more investment at this stage.
A wise choice. Focus on the basics and recovery before taking on more risk
What a stupid suggestion (unless it was a joke).
Quick Update:
He invested in the XRP, not ripple
I just confirmed with him
XRP is the code for ripple
XRP is the crypto currency used by Ripple's xrapid product to provide liquidity.
Ripple is a cross-border remittance and liquidity provider who have many products that don't rely on XRP. XRP is just one of their offered solutions (it's not "Ripple", Ripple is a company).
XRP is one product that's aiming to solve a problem for a multi-trillion-dollar industry and could end up being very successful. Not something to invest in blindly as with all investments you need to understand what it's trying to solve, how it will solve and how it can be monetised (make profit).
OP's brother's losses do not stem from anything specific to XRP, he obviously (and foolishly) purchased XRP at the top of the largest crypto bull run ever. FOMO at work - nothing unique here to XRP, any and every crypto would have lost similar %.
Yes he did, first purchase was $4.54 and then $4 $3 $3 $1 and all the way down to under $1
the amount of typo in this article is too damn high
typos*
me mate told me that's not a typo just a bad grammar
You guys aren't helping. You're making things worth.
As others have said, he should probably get some advice around this, but some options…
Keep the Perth investment in the hope that it should improve (as long as it has good investing fundamentals).
Consider starting a small 50% geared regular share based investment into some index funds. This would provide some tax efficiency and some gains that could be sold and soak up the capital losses.
From the activity it would appear that he will be classified as a "Trader":
His disposals of cryptocurrency, whether into Australian dollars, USD, EUR, or into another cryptocurrency including USDT, are sales and need to be reported on your tax return.
Your purchases of cryptocurrency are considered a cost of sales and are claimable on your tax return.
Cryptocurrency which the business owns is considered “trading stock”, and if you hold some cryptocurrency on 30 June (end of the financial year), then you also declare this on your tax return. Interestingly, when reporting closing cryptocurrency, you have a choice to declare it at cost or at market value, which can sometimes provide tax planning options to minimise tax.
If you incur costs as part of your trading business, then these are usually tax deductible.
Examples can be Internet costs, trade subscriptions, accounting fees, home office use, and computer equipment.
In cases where it's not possible to calculate the value of the cryptocurrency you received, the capital gain can be worked out by using the market value of the cryptocurrency you disposed of when the transaction occurred.
If you’re a trader, then broadly speaking this is how you’re taxed:
Profit – 100% tax assessable
Loss – 100% tax deductible (subject to passing non commercial loss rules)
He only bought and sold on BTCMarkets using AU dollars.
He did 89 buys and 43 sells. 132 trades happened within the last 8 months
Now his holding is 0.
Many of you are right, he purchased Ripple from $3.50 all the way done to $0.88
Sold his last batch at $0.68
Not sure how would he be classified but he will get an good accountant to look at it.
XRP is now doing $0.44 AUD lol
Sorry what is a geared share investment? Like borrowing money to buy shares?
I bought ripple @ 34c in November and it hit $5. It's very low now and the perfect time to buy. It definitely has another bull run before dying. I estimate $10 by end of Summer. What's the point of selling if he's already lost so much..?
Fear.
Well he sold it because it’s not looking like it will go up and he don’t want to lose all
I don’t know, I won’t invest in it.
$10 of end of summer is when? Jan 2019 you think it will go to $10? It’s $0.45 now you know…….
Any reasons it will go to $10?
Any reasons it will go to $10?
His gut says so
That is a worry if guy says it….
The hype in crypto died but the technology never halted advancement. We have a financial crisis every decade and it's coming soon. This time the confidence and trust will be channeled to cryptocurrencies, all while the technology and imemplementation produce exponential effects.
His losses are capital losses. They may also be revenue losses if he can show that he was trading with significant sophistication such that he was carrying on a business of crypto trading (helped if he can show that he quit his job because of crypto - not clear from your comments if this did or did not happen). (They don't double count - revenue losses win over capital losses.) If the losses are revenue losses he can offset against his wages. He should definitely see a tax agent for advice.
No he lost his job recently. He was still in his job when he invested.
The reason he sold all his ripple is because he is fearing he will lost everything now he has no jobs.
He went into investing blind.
Investment 101 requires you to prepare for the only things certain in life - death and taxes - through insurance, and a 'hard times buffer' of cash that shouldn't be touched.
The other thing he failed to address was his risk profile - clearly he couldn't sleep at night when his investments dipped.
All advice too late for now, but not too late for the future when he starts again.
Question for those who trade Ripple or any other crypto:
Been looking at the Ripple news and article for a few days and I don’t understand one thing. The company looks like are tapping into something uncharted. How is it possible that it lost 90% if it’s value??? Didn’t see any bad news for the past 3 months at least. So out of nowhere it just dropped 90% value?
I am a share investor so I know if my shares are down 90% something terrible must have happened. From my understanding that Ripple doesn’t seem to have any negative news released and the price just went down still?
Don’t really understand this logic.
Anyone trade crypto can share some light please????
As my brother mentioned to me today that his friend said it’s a huge mistake selling at around $0.68 and he should at least hold on. Or even purchase some as the price is now another 40% lower than the price sold?
What will happen if Ripple goes to say 10c? Is the company broke and delisted? Like the stocks trading on the ASX?
Thanks heaps
XRP are not shares in a company. The company that develops Ripple will (probably) not go under if Ripple loses all of its value. Shares have value because the company generates earnings. The value of Ripple is entirely speculative. You are asking why the value dropped 90% but not why it increased 1000% in such a short time in the first place. The scene from Wolf of Wall Street, where Matthew McConaughey takes Leo Di Caprio to Windows on the World and explains that nobody knows if the stock is going to go up, down, sideways or in circles, is very relevant to crypto.
Ok thanks for that, good to learn something new everyday
The rise and fall in price for XRP is not specific to XRP. The entire crypto market had an enormous bull run which lifted the price of nearly all cryptos, somewhat due to FOMO (fear of missing out). XRP's price increase was not due to their fundamental market but just the entire crypto market.
Hence, there is no "bad" news that caused the "correction" in price. XRP's price may one day be far higher due to its utility (being heavily used in the financial markets). But that day has not yet come (but it's starting to).
"Ripple" can never go to 10c, Ripple is a cross-border remittance and liquidity provider (a company). XRP (a crypto token used by one of Ripple's products - xRapid, has a price that could go to 10c but Ripple are far more than just "XRP".
XRP is a token to provide liquidity in their cross-border payments product (amongst other things), but is not "the company".
Sounds still highly speculative to me.
However you are right, maybe its worth awhile to put $2000 into it and set and forget for the next 5 - 10 years.
But I wouldnt put more than that.
Certainly my brother has picked a wrong time to invest.
I'd say "Don't put in more than you can afford to lose".
But I'd also add that IMO it's one of the least speculative cryptos - it's in real use now being used by real financial institutions.
Ripple's rate of new customers (financial institutions) joining the network has doubled over the past 6 months (from 1 a week to 2 a week) and the value of their network is increasing with each new member. Their network's value is increasing every day and that in turn is bringing in more customers. Ripple as a company and XRP as a utility is starting to show signs of real future success. If they manage to get just 10% of the financial market they're targeting then XRP holders should make substantial gains.
Contrast that with the vast majority of cryptos, XRP has a real use for an existing industry, where as BTC, ETH, LTC, etc are just hoping that people want them, they have no inherent utility etc that can't be found in other financial instruments.
Banks currently rely mostly on SWIFT for cross-border payments, this takes days to clear and requires holdings in NOSTRO and VOSTRO accounts and associated clearing costs. Ripple can do the same transactions in seconds (not days, but 5 - 20 seconds), removes the need for NOSTRO and VOSTRO accounts and removes volatility risk of holding currencies to complete the transactions. Holding XRP for 20 seconds VS holding fiat currencies for days removes a LOT of volatility risk, funding costs, etc.
So a real product, solving a real market need. There's certainly some speculation, but there's also reason to believe they'll be successful. When a bank can save 60 - 70% of the cost of transferring/receiving trillions of dollars - there's a real desire to change. We're seeing that happen slowly now.
SWIFT was designed and implemented in the 70's, it's old and doesn't work well (days for settling a transfer? How 1970's!!)
It's risky, but the upside could be huge. Only invest what you can lose.
I'm not a financial adviser nor a banking expert so take my words as the standard forum banter (a dude's opinion).. But I have a sizeable holding of XRP and am willing to lose the lot on the chance of the upside, a risk I'm happy to take.
@iDroid: Thanks for the detailed explanations.
Sounds like my brother should have hold on instead of selling it.
From your comments, sounds like XRP is going to replace SWIFT one day?
Wonder how would the majority of the financial partners see it been so volatile?
I may put $2000 into this XRP and see how it pans out.
@house2015: I agree he should have held, but that easy to say when it's not my $$$ sinking! AND I could be wrong!
As for volatility - that's one of the key missunderstood aspects of XRP (specifically xrapid - the product utilising XRP).
XRP is certainly more volatile than fiat currencies (especially during bull runs and corrections), but the key is - it changes from holding $billons in NOSTRO/VOSTRO accounts (fiat currencies) for days or more VS holding XRP for 5 - 20 seconds. The volatility risk of holding fiat for days is orders of magnitude higher than holding XRP for seconds. Couple that with the benefit of the savings from not using SWIFT there'd need to be a very compelling reason to not switch to xrapid.
Yep, ripple are aiming at replacing SWIFT (big goal there)..
Please don't purchase any XRP due to my comments - do more research and convince your self of its value first. I'm FAR from a financial adviser and you should take my words are a first step in your research!
Investment loss can be carried forward to offset future investment gains indefinitely, but not future income.
PS your brother needs some serious help, negatively geared + cryto trading? That's just asking for trouble. You should watch out that he doesn't actually start gambling.
Thanks he doesn’t gamble. But I will keep an eye out
Just a quick update on this thread:
He told me after speaking to a number of people there is a good chance his trading can be classified as a trader due to the number of transaction happened in such short of time.
I will report back when I know more.
By the way the current price of xrp is 0.43
Hi this is quite a late response but i stumbled on it again when i was looking at my history.
According to the ATO example listed below, it is quite likely your brother would be classified as a trader due to the volume, record keeping, amount invested and a profit making intention.
https://www.ato.gov.au/General/Capital-gains-tax/Shares,-uni…
He could therefore use his losses as a deduction against any of his income, which is preferable to capital losses.
He is not doing ok at the moment but he needs to learn this the hard way. O don’t think I will give him another investment book at the current time.