Let's say you buy 1x BTC for $80k, then some months later, convert that 1xBTC to 15x ETH and then hold the ETH.
Is the BTC component taxable?
And if so, how do you calculate the sold price?
Crypto Tax Advice - When You Convert between Coins, Is This Taxable?
monty168 on 18/11/2021 - 11:41
Comments
It's taxable even if you swap it.
Do investors have to keep record of each transaction, record the profit/loss, and report during the tax return?
Or each exchange will email a report to the investors, so investors don't have to do the book keeping?
Or ATO gets a report from each exchange, so investors don't have to do the book keeping?Do investors have to keep record of each transaction, record the profit/loss, and report during the tax return?
You must keep records of:
* Supporting Evidence, and
* How you calculated CGTSo yes.
Or each exchange will email a report to the investors, so investors don't have to do the book keeping?
Some might, but your tax return is your responsibility.
You must keep records of:
* Supporting Evidence, and
* How you calculated CGTOr ATO gets a report from each exchange, so investors don't have to do the book keeping?
The ATO might get records but for the second half your tax return is your responsibility.
You must keep records of:
* Supporting Evidence, and
* How you calculated CGT
https://www.ato.gov.au/general/gen/tax-treatment-of-crypto-c…
Any time you trade one coin for another it triggers a CGT event
'the capital proceeds from the disposal are worked out using the market value of the cryptocurrency you disposed of at the time of the transaction.
Good answer
Yes it is taxable.
Thanks makes sense now
Every trade.
Gov may change it so its only a taxable event once you withdraw for fiat but not yet
calc cost base or something,
Hopefully they change it soon, will save a lot of people a lot of paperwork
Agreed I’ve never kept track as it doesn’t make sense to keep a record until it’s sold.
Except that it has been recently changed though, it went from non-reporting to must-be-reported for coin to coin exchanges regardless if it's a capital gain or loss. Look at Singlemalt's post.
This was the first year I had to include all my crypto movements in my tax return even though I only buy, hodl and exchange.
If you use a service like Koinly, it's no paperwork at all.
This has been a thing since like April 2018 when they brought out hastily-written law on "yes, crypto is subject to CGT".
Wont happen, because then it would have to apply for shares and forex traders as well which doesn't work.
Eg: I want to convert my BHP shares to RIO or my AUDUSD holdings for JPYGBP.
I can't imagine why the govt would change this though.
It's like buying and selling any kind of asset. If you could do swaps to make your gains without paying tax then no ones going to be paying any tax.
It wont happen. If so Shares can be swapped, houses can be swapped without triggering the CGT.
Hell lot of loopholes would come. When you trade any Crypto pair, you are selling and buying as per ATO
Some countries tax crypto gains only when changed to fiat money. It doesn't create a loophole for shares or properties.
How would that work with partial withdrawal in fiat though?
Let's say you spend $1000 and you swap/stake multiple times and you end up with 1000 coin A, 200 coin B and 52 coin C. You decide to cash out 200 coin B for AUD. How would you calculate the capital gain/loss in this case?
Like all CGT. What was the cost of buying the thing? What was the value when selling? Subtract A from B. That is your gain.
Most major exchanges can generate a FY trade document for tax time
Yeah technically it is.
I would just calculate tax based on the total profit cashed out though.
This isn't a terms of service violation, this is the law.
If you do not keep sufficient tax records as required by the tax laws in Australia, you have committed a criminal offence and can be prosecuted by the ATO.
If you make a false or misleading statement to the ATO in your income tax return, you will commit a criminal offence and can be prosecuted by the ATO.
I doubt they would make a big deal over $100-$200 difference. Or would they?
I would've thought there would be a threshold of a few hundred dollars since people claim fake deductions to that amount anyways (e.g. charity donations) where receipts are not provided..
I would've thought there would be a threshold of a few hundred dollars since people claim fake deductions to that amount anyways (e.g. charity donations) where receipts are not provided..
lol no.
Do your civic duty, https://www.ato.gov.au/tipoffform/
phoning the ATO Tip-off hotline on 1800 060 062.
writing to the ATO – mark all letters 'in confidence' and post to:
Australian Taxation Office
Tax Integrity Centre
Locked Bag 6050
Dandenong VIC 3175Tax whistleblowers have legal protections when they disclose tax avoidance behaviour and other tax issues to the ATO about an entity they are, or have been, in a relationship with.
You can remain anonymous.https://www.ato.gov.au/about-ato/contact-us/report-fraud,-ta…
Pro-tip:
if you're actively trading 'a lot' and with 'sizeable amounts', you may be able to get ABN and claim 'stock trader business' status. This comes with various benefits, such as lumping together all buy/sells over the FY, and not individual trades.Talk to your accountant about it for more info.
https://www.ato.gov.au/Individuals/Capital-gains-tax/Shares-…
You get taxed on 100% instead of 50% as capital gains tax though, definitely not worth it unless you have a lot of costs that you can claim with it via treating it as a business.
Yeah, depends on your situation a lot. If you're not holding for 12mo you're up for the full 100% CGT anyway.
This. In my experience many people do not HODL Crypto for more than 12months so aren't eligible for the 50% CGT discount.
I'm an Accountant, we utilise Crypto Tax Calculator for clients with high transaction volume, takes the time/stress out of manual calculation. We find it works well and integrates with most major exchanges: https://cryptotaxcalculator.io/au/
is this better than using Koinly which looks like its free?
Yeah pricing is a factor… Crypto Tax has an accountants portal subscription enabling us to service multiple clients for a reduced fee. Perhaps if your doing it yourself you'd get a similar outcome with Koinly? I just haven't used it personally so I'm not sure what the platform is like?
thanks
charge the client? or just keep it hush?
Ditto.
Use the Accountants Package also.
I also run them through Koinly occasionally to see any differences.
Sometimes Koinly can import Wallets via CSV and CryptoTaxCalculator can't, so I run them through this and then print out the transactions and then manually add to CryptoTaxCalculator etc.
Hello, it's me again.
There are two ways to avoid paying taxes.
1, Don't sell. Take out a loan using asset A to get asset B. No sale, no tax and get to keep the assets.
2, INC a company in a tax-free jurisdiction, set up a trading desk, trade as much as one want and pay zero taxes. Portugal, Dubai, El Salvador and Hong Kong are some of the popular ones.
1, Don't sell. Take out a loan using asset A to get asset B. No sale, no tax and get to keep the assets.
Interest.
INC a company in a tax-free jurisdiction, set up a trading desk, trade as much as one want and pay zero taxes. Portugal, Dubai, El Salvador and Hong Kong are some of the popular ones.
Please see:
https://en.wikipedia.org/wiki/Piercing_the_corporate_veil
https://www.ato.gov.au/individuals/ind/resident-for-tax-if-w…The variable interest rate on ETH is 0.34% APY and the stable rate is 3.49% APY. Compare that to the CGT that can be up to 33.2% depending on income.
Selling doesn't make sense unless people like getting screwed by taxes.
How do you get 33.2% for CGT?
Your idea isn't completely stupid though:
https://www.wsj.com/articles/buy-borrow-die-how-rich-america…Where can you loan for 0.34%?
By stable do you mean stablecoins?
Tether published a report showing that only 2.9% of Tether was backed by cash, with over 65% backed by commercial paper.
https://en.wikipedia.org/wiki/Tether_(cryptocurrency)
how would they know defi transactions? theres no kyc there.
You do realize that the blockchain is public?
do you know my wallet address then?
Better not order anything with your real address then.
https://www.technologyreview.com/2019/10/16/132575/bitcoin-s…
The correct answer is to use something like Zero Cash
ok its possible if exchange disclose all the addresses youve withdrawn you crypto then.
Hardware wallets allow transactions on the network and without external factors - they are essentially anonymous and not traceable by the ATO. All other platforms are exposed to the Australian tax system. All transactions have to be reported.
The obvious downside to hardware wallet trading is 'how do you spend it…' Until payment via crypto becomes widely accepted, you could be waiting a while.
hardware wallets like ledge x trezor?
are meta trust considered hardware wallets?
Does anyone know what the taxable event is if you have invested into a project that was a scam?
So you've purchased the tokens but you haven't been able to sell them and they are worthless. Is this a capital loss?
Claim the full price plus costs.
Thank you!
What is the token?
People saying to claim the full amount as a loss - you still legally own the asset. (I have some in similar situation).
I’d take care here. According to ATO, IMO, you still own the asset and you haven’t disposed of it.
if you cannot sell it anymore as it was rugged, can you write off your investment?
Yes. You don't have to sell the asset to claim a capital loss. You can claim a loss by disposing of it.
Dispose of the asset and use (zero - Tx cost) - (price paid + Tx cost) = capital loss.
How do you dispose?
Give me the name of the coin/token and I'll show you how to dispose of it for a capital loss.
@rektrading: No judgement.. I know I messed up! But:
https://etherscan.io/token/0x27f97bc09a4e28d5935a08e2810b3e3…
@pacman21: Tx the token to 0x0000000000000000000000000000000000000000.
Save the Txn hash as a receipt of disposal and use that to claim a capital loss.
I hope it wasn't squid game. I hear the code doesn't let you 'sell' it haha.
It's a nightmare working it out. I guesstimated mine and the ATO were happy.
This is my first financial year into crypto and I’m hooked. What did you provide to them, the total profit or loss? How do you tell them if the coin was bought and sold under or over a the 12 month mark?
Use Koinly.
not sure why people are guestimating shit when you can literally hook in your exchanges and it spits out all the data in <20minutes.
Using an API exposes the wallet address to the app. The app's creator can using the code track the address. This can't be undone once permission has been given.
@rektrading: What do you use?
I track all my purchases with a spreadsheet so I have all the information already.
@rektrading: And the downside of this is?
The ATO will already know some of this information through the KYC stuff you filled out when you joined binance/IR/KUCoin/etc and data matching/sharing so if you're hinting at hiding your profits, I've got some news for you…..
Depends how the server treats the exchange. Most likely, it will convert the BTC to cash and re-buy it for ETH. This would mean it is taxable.