Cryptocurrency mega-thread

[Taylor]

Every transaction that makes a capital gain will be assessed as a gain, but my understanding is that a loss won't be.

And unless your coin exchange torches it's records of transactions you're going to get found.

 

[Taylor]

It's not that I don't want to hear it, it's the fact that the ATOs own website has such a nebulous explanation regarding taxation of cryptocurrency that seems to be open to interpretation; there is nothing that clearly or explicitly states that you're required to pay taxes from profits made on coin-to-coin crypto trades. As I said before, I'm more inclined to believe that taxing coin-to-coin trades is unenforceable due to the reasons I outlined in my last post.

You should also keep in mind that the ATO reserves the right to cancel a declared policy without notice and prosecute you for attempting to defraud the Commonwealth of Australia.

There have been people sent to prison after the ATO gave them a ruling, they acted on the ruling, the ruling was changed and they were sent to gaol.

 

[woota]

You should also keep in mind that the ATO reserves the right to cancel a declared policy without notice and prosecute you for attempting to defraud the Commonwealth of Australia.

There have been people sent to prison after the ATO gave them a ruling, they acted on the ruling, the ruling was changed and they were sent to gaol.

Right, so thousands of law-abiding, hard-working australians are going to be sent to gaol for "defrauding the Commonwealth of Australia" because the government decides to cancel a declared policy without notice. They'd better start building some bigger prisons then.

Every transaction that makes a capital gain will be assessed as a gain, but my understanding is that a loss won't be.

And unless your coin exchange torches it's records of transactions you're going to get found.

So are coin-to-coin trades classified as a capital gain? That makes no sense. Due to the extreme volatility of cryptocurrencies, exchanging one crypto for another could mean a profit at the time you made the trade, which could later turn into a loss if you just hold the coin. Any coin-to-coin trade you make could literally change from a profit to a loss from one day to the next. In other words, there's no way to actually assess whether or not you've made a profit or a loss until you sell the coin in exchange for fiat currency. And because the only way to cash out cryptocurrency on australian exchanges is by converting whatever altcoin you traded into BTC or Ethereum, then selling it for fiat, I don't think the government even cares what altcoins you hold; they're primarily concerned with bitcoin and ethereum because that's the only way to cash out back into fiat.

 

[footy75]

flipping crypto... fk...

 

[Taylor]

Right, so thousands of law-abiding, hard-working australians are going to be sent to gaol for "defrauding the Commonwealth of Australia" because the government decides to cancel a declared policy without notice. They'd better start building some bigger prisons then.



So are coin-to-coin trades classified as a capital gain? That makes no sense. Due to the extreme volatility of cryptocurrencies, exchanging one crypto for another could mean a profit at the time you made the trade, which could later turn into a loss if you just hold the coin. Any coin-to-coin trade you make could literally change from a profit to a loss from one day to the next. In other words, there's no way to actually assess whether or not you've made a profit or a loss on coin-to-coin trades until you actually sell the coin in exchange for fiat currency. And because the only way to cash out cryptocurrency on australian exchanges is by converting whatever altcoin you traded into BTC or Ethereum, then selling it for fiat, I don't think the government even cares what altcoins you hold; they're primarily concerned with bitcoin and ethereum because that's the only way to cash out back into fiat.

If there is a real world currency value for something and you trade into it there will be a measurable value for that product.

Even if you buy something that doesn't have a direct value, you bought it with something that did and that pins the value at that point.

2 bitcoin buying 1,000,000 TaylorCoins (which can't be bought directly) when bitcoin was valued at $10,000 makes each TaylorCoin worth $50. So if a later sale of them is more, there is a captial gain

 

[cryptor]

So crypto is liable to being double taxed? Whilst being crypto & subject to CGT once you convert to AUD?

Keep seeing this misconception that being taxed on each trade is somehow “double tax”.

For the sake of this example let’s assume this all happens in the one financial year and we don’t take into consideration your other income and tax circumstances or the fees involved. Just look at the crypto trades in isolation.

Say you start with AU$1,000. You deposit your money and then buy AU$1000 worth of BTC (let’s say 1 BTC = AU$16,000 at the time).

So you now have 0.0625 BTC (worth AU$1,000)

3 months pass. The price of BTC has jumped and dipped and been all over the place. But as you haven’t traded it in that time there has been no CGT event.

So after that 3 months the exchange rate is now 1 BTC = AU$22,000.

You decide you like the sound of ETH now, which we’ll say at the time is at 1 ETH = AU$1,400.

So 0.0625 BTC for as much ETH as it can get you.
ie. AU$1,375 ($22k x 0.0625btc) worth of ETH @ rate of 1 ETH per AU$1,400. Which is 0.982... ETH.

This trade triggers a CGT event so you need to pay tax on the profit made. So you need to pay tax on AU$375.

2 weeks pass and the price of ETH goes up and down a bit but then comes back to what it was when you purchased (1 ETH = AU$1,400).

You decide to cash out now into $AU. So you receive AU$1,375. This is $375 more than you started with and that is all you pay the tax on. It’s already been counted once when you traded BTC to ETH. So there’s no additional tax paid on your ETH to AUD trade as the profit there had been $0.

The tax is calculated only on the difference between each trade. Not the difference between each trade and then also again between the entry and exit points of fiat currency.

This is why everyone should be keeping a record of all their trades and hiring a tax accountant to do all the math involved.

 

[Mercurial89]

Keep seeing this misconception that being taxed on each trade is somehow “double tax”.

For the sake of this example let’s assume this all happens in the one financial year and we don’t take into consideration your other income and tax circumstances or the fees involved. Just look at the crypto trades in isolation.

Say you start with AU$1,000. You deposit your money and then buy AU$1000 worth of BTC (let’s say 1 BTC = AU$16,000 at the time).

So you now have 0.0625 BTC (worth AU$1,000)

3 months pass. The price of BTC has jumped and dipped and been all over the place. But as you haven’t traded it in that time there has been no CGT event.

So after that 3 months the exchange rate is now 1 BTC = AU$22,000.

You decide you like the sound of ETH now, which we’ll say at the time is at 1 ETH = AU$1,400.

So 0.0625 BTC for as much ETH as it can get you.
ie. AU$1,375 ($22k x 0.0625btc) worth of ETH @ rate of 1 ETH per AU$1,400. Which is 0.982... ETH.

This trade triggers a CGT event so you need to pay tax on the profit made. So you need to pay tax on AU$375.

2 weeks pass and the price of ETH goes up and down a bit but then comes back to what it was when you purchased (1 ETH = AU$1,400).

You decide to cash out now into $AU. So you receive AU$1,375. This is $375 more than you started with and that is all you pay the tax on. It’s already been counted once when you traded BTC to ETH. So there’s no additional tax paid on your ETH to AUD trade as the profit there had been $0.

The tax is calculated only on the difference between each trade. Not the difference between each trade and then also again between the entry and exit points of fiat currency.

This is why everyone should be keeping a record of all their trades and hiring a tax accountant to do all the math involved.

Since its treated Capital gains asset its also treated for loss.

So judging by many people flooding into the market when Tron was around 30c before it plummeted to 6c there may be a few people able to claim that loss to offset their gains

In all seriousness though, I totally understand why people would not want to pay tax on crypto. Investing their own wages (they already paid tax on) to take a risk (classified by many as one of the riskiest investments available to your common Aussie) on a speculative asset that could be wiped down to absolute zero in an instant in an attempt to try and make some money to bridge the gap between themselves and the rich who know and exploit every tax loophole in the book. Not to mention how this country is using our hard earned that they take in tax?

Tbh I don't blame them.

 

[typeclub]

I don't trade on Aus exchange I buy and move them to overseas exchanges for trading. Oops I lost my password all my Crypto is gone.

 

[NitroFan]

The most pertinent line on the ATO website is this

Bitcoin is, however, an asset for capital gains tax (CGT) purposes.

Generally speaking if you dispose of an asset you pay tax on it if you made a profit. The question is whether the ATO are going to consider trading one coin for another as disposing of it.

 

[cryptor]

Since its treated Capital gains asset its also treated for loss.

So judging by many people flooding into the market when Tron was around 30c before it plummeted to 6c there may be a few people able to claim that loss to offset their gains

In all seriousness though, I totally understand why people would not want to pay tax on crypto. Investing their own wages (they already paid tax on) to take a risk (classified by many as one of the riskiest investments available to your common Aussie) on a speculative asset that could be wiped down to absolute zero in an instant in an attempt to try and make some money to bridge the gap between themselves and the rich who know and exploit every tax loophole in the book. Not to mention how this country is using our hard earned that they take in tax?

Tbh I don't blame them.

It definitely sucks. It’s confusing and frustrating because we’re the ones taking the risk while the government refuses to acknowledge it as a currency or worth anything until it suits them (tax time).

People can obviously do their own thing and try to dodge the tax if they want. I’m just sharing information on the topic that I’ve researched for the benefit of those who are trying to do the right by the law (whether or not it’s fair is a different matter). I’ll still be seeking the services of a qualified tax accountant.

 

[woota]

I've read the ATOs webpage about crypto taxation and threads like this on the ATO support forum (https://community.ato.gov.au/t5/General-tax-questions/How-to-declare-Bitcoin/td-p/980) where ATO employees answer questions from the public. You'll notice that the ATO only refer to bitcoin specifically; they never mention other cryptocurrencies or altcoins, even when questioned about it directly. If you read that forum you'll see how they shirk questions specifically asking about trading cryptocurrency on foreign exchanges and participating in ICOs. The ATOs avoidance of these topics is a little mystifying.

In my opinion, this whole thing is still up in the air and the ATO themselves don't have all the answers.

 

[cryptor]

It's not that I don't want to hear it, it's the fact that the ATOs own website has such a nebulous explanation regarding taxation of cryptocurrency that seems to be open to interpretation; there is nothing that clearly or explicitly states that you're required to pay taxes from profits made on coin-to-coin crypto trades. As I said before, I'm more inclined to believe that taxing coin-to-coin trades is unenforceable due to the reasons I outlined in my last post.

The ATO website is meant to be just a guide for us plebs apparently. Accountants deal with the yucky tax laws which supposedly go into far more detail. They also deal directly with the ATO when there are grey areas.

 

[NitroFan]

Due to the extreme volatility of cryptocurrencies, exchanging one crypto for another could mean a profit at the time you made the trade, which could later turn into a loss if you just hold the coin. Any coin-to-coin trade you make could literally change from a profit to a loss from one day to the next.

That's your problem and the risk you take from being involved in such a volatile market.

Inother words, there's no way to actually assess whether or not you've made a profit or a loss until you sell the coin in exchange for fiat currency.

Yes there is. Did the value of the asset change from when you acquired it to when you disposed of it? If yes there is your profit or loss.

 

[woota]

That's your problem and the risk you take from being involved in such a volatile market.



Yes there is. Did the value of the asset change from when you acquired it to when you disposed of it? If yes there is your profit or loss.

That still doesn't answer the most pertinent question about trading on foreign exchanges -- does the profit/loss attributable to trades using the foreign exchanges constitute 'Foreign Income'? Again I've seen this asked on the ATO support forum and it gets ignored.

 

[eagles rule]

Foreign investments maybe ,no idea how that works..


On iPhone using BigFooty.com mobile app

 

[Chubberson]

This must be some task force. Good thing govt workers aren't known for competence or hard work.

 

[Duritz]

Every transaction that makes a capital gain will be assessed as a gain, but my understanding is that a loss won't be.

This is entirely not what the ATO article suggests.

 

[Nebula1971]

Can't it just be made very simple?

Why doesn't the ATO just tax us on the differential of the,

Sum of dollars invested into exchanges for the purchase of crypto

Minus dollars converted back to fiat.

If there is a gain you pay tax on that.

Itemising every coin to coin trade would be virtually impossible to track the value of every deal.

Which accountant is going to calculate all this info? There has to be a more streamlined process.





Sent from my iPhone using Tapatalk

 

[eagles rule]

I think I read a few hundred posts back someone said 35% tax on profit dividends if investment withdrawn inside a year but only 15-20% if investment held for 2 yrs or longer ie long term investment ..

Could be BS though ..


On iPhone using BigFooty.com mobile app

 

[NitroFan]

I think I read a few hundred posts back someone said 35% tax on profit dividends if investment withdrawn inside a year but only 15-20% if investment held for 2 yrs or longer ie long term investment ..

Could be BS though ..


On iPhone using BigFooty.com mobile app

CGT is 50% if held for less than a year and 25% if held for longer.

 

[Chubberson]

Ooh yeah baby, gimmie sommathat sweet soft silky Walt.

 

[Heisenberg_]

Do people think it's too late to get in on waltenchain?

 

[cryptor]

CGT is 50% if held for less than a year and 25% if held for longer.

Are you sure? I've seen it written as if you hold if for less than a year you pay tax on 100% of the profit. If you hold it for 12 months or longer then you get a discount and only pay tax on 50% of the profit.

 

[FrankGrimes]

Are you sure? I've seen it written as if you hold if for less than a year you pay tax on 100% of the profit. If you hold it for 12 months or longer then you get a discount and only pay tax on 50% of the profit.

This ^ is correct..
ATO can go back as far as 7 yrs remember so they may not get you this year but have 6 more years to get you.

 

[Theseventhhamster]

Do people think it's too late to get in on waltenchain?

It's barely above Dogecoin for market cap, has a ton of potential and a heap of China behind it. Tron is 4x larger, ADA 17x and neither is actually anything. Never too late.