Bitcoin/Crypto Tax for Partial Withdrawals

[Deactivated] on 16/08/2022 - 17:18

How does CGT work when disposing cryptos if you are partially withdrawing?

For eg, say I've purchased $1000 worth of Bitcoins and now its worth $2000.

Then, I decide to withdraw only $1k (let's take CGT discounts out of equation just for simplicity).

Is the entire $1k taxable?

I just feel that its strange, cus if I sell the entire $2k, that means I made $1k profit, so I will be liable for tax on that $1k earnt.

So by this logic, if I sell only $1k, I should be taxed on lower value, like maybe $500?

I'm so confused.

Financial Cryptocurrency

Comments

  • iamherenow on 16/08/2022 - 17:23
    +3

    Use the buy price of the quantity you sell to calculate profit.

    Edit: In your example, buy price of half is 0.5*1000=500. So profit if sell these for $1000 is 1000-500=500.

  • Switchblade88 on 16/08/2022 - 17:27
    +2

    CGT is worked out on two points in time - acquisition date and disposal date. If you're not selling the entire amount, then it's also a percentage of the total acquisition - in this case, 50% of the initial purchase. This percentage is obviously only worked out once you've made a disposal.

    So you've 'disposed/gained' $1k, from a $500 initial valuation when you bought the BTC, and it's these two values that determine your actual gains - that being $1000-$500 = $500 of gains. Thus, you'll pay 'income tax' on your $500 of profit.

  • DingoBilly on 16/08/2022 - 17:27
    +2

    You need to base it on the value at the time of disposal - cost base.

    So you've sold X amount for $1000, which cost you $500 to acquire originally (cost base), so your total profit to be taxed is $500.

  • Handymancan on 16/08/2022 - 17:29
    +1

    Based on your initial buy in price and quantity.
    Following your example you sold your base $500 and made $500 profit, you would be taxed according to the capital gains profit made.

  • Donaldhump on 16/08/2022 - 17:30
    +1

    you bought 5 bitcoins @ $200 each for a total of $1000
    they are now worth $400
    you sold 2.5 bitcoins for $400 each for a total of $1000

    your gain is $500 (2.5 * (400-200))

  • [Deactivated] on 16/08/2022 - 17:33
    +1

    Hey guys, thanks for the quick input. And I just realised it works like the stock market. When I made the initial purchase I've bought certain number of BTC. And at disposal I only dispose half of it. So I just multiply the number units I sell by the market price.

    Sorry guys, I just had covid and had a massive brain freeze moment there.

    My bad may bad, it was a really dumb question.

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