Cryptocurrency is a highly debated topic, both in Australia and globally. However, no one can deny the profits and increased popularity they have recently garnered. When you are getting started with cryptocurrency, you might try to look for ways to be a successful investor.
Australia is creating a licensing framework to ensure that all crypto-related transactions go without a hitch or uncertainty. The Australian Tax Office has released a guidance document concerning the Australian crypto tax so that everybody can understand it better.
Here is a detailed Australian crypto tax guide that will ensure that you know what it means to invest in cryptocurrency in Australia.
Is Crypto Legal In Australia?
Before looking at cryptocurrencies for making suitable investments, you should know the legality of such assets in Australia. In Australia, cryptocurrency is not technically classified as a currency but a property that you can own. Formally, cryptocurrency was legalized in Australia in 2017, which led to a boom in cryptocurrency investments. You should know that when you are using a platform or third-party service for your crypto investments, they require a license by the Australian government to do so.
How Can You Get Taxed On It?
For tax purposes, know that when you get taxed on your crypto holdings, they tax your ownership of an ‘asset.’ Tax is based on whether you are a trader or investor in various cryptocurrencies. For example, investors have to pay taxes for their cryptocurrency ownership under Capital Gains Tax, while traders pay their regular income tax. Since traders do not technically own the crypto, they do not have to pay for its ownership.
Many factors determine whether you are an investor or a trader in cryptocurrencies. You can find out more about it when you visit any third-party crypto trading platform or the Australian Tax Office website.
How Is It Assessed?
Any time you sell, trade, or gift your crypto to anyone else, you need to pay Capital Gains tax on it. However, if you end up holding the crypto for more than 12 months, you may be eligible to get a 50% discount on your entire CGT.
When you are a trader, you do not need to worry about the assessment part as you need to deposit all the regular taxes, including income, excise, and more. However, it would be advisable to hire a tax agent at least once to ensure you do not need to pay any more taxes concerning your business.
How to Calculate It?
When you wonder how to calculate the tax you have to pay on your crypto, it might be worthwhile to head over to a detailed Australian Crypto tax guide for investors. You can also find many services online that quickly calculate how much Tax you owe depending on your own.
Is It Worth The Money?
If you consider investing in crypto, you might be thinking, is it worth the investment? Depending on which currencies you are investing in and what their returns are, investing can end up being very lucrative. However, you must be aware of the risk of investing in crypto.
Once you are clear on the taxes, you can start investing with any licensed and regulated third-party platform in Australia.