Yes, you will have to pay taxes on your cryptocurrency if you hold it as an investment. In a crypto investor's ideal world, no taxes would apply to digital currencies. However, the federal government considers crypto investments to be assets, making them subject to capital gains tax (CGT). Transactions such as disposals, exchanges and swaps are all considered his CGT assets by the ATO, but Liz Russell, senior tax manager at online tax filing service Etax.com.au, says this fact is often overlooked. It is said that it is.
“Many people are aware that exchanging one type of cryptocurrency for another, for example using Bitcoin to buy Ethereum, is also considered a material event by the ATO. I don't realize it,” Russell said.
“So in this case, the price difference between when you bought Bitcoin and when you used Bitcoin to buy Ethereum would be treated from a tax perspective in the same way as if you sold Bitcoin for AUD. Masu.”
The Australian government has not yet declared cryptocurrencies as official or legal tender, so they are currently classified as assets. This was reaffirmed in the recent budget, with the Albanon government stating that cryptocurrencies will not be considered foreign currency for tax purposes, indicating that Australia will not follow El Salvador's lead in declaring Bitcoin legal tender. It seems so.
Therefore, like any other asset, if you sell your cryptocurrencies for a profit, you have made a capital gain and will have to pay taxes on this profit.
It is important to note that CGT is just a title. Net profits earned from investments qualify as taxable income for income tax purposes. So, what is the capital gains tax rate for your virtual currency? It is the same tax rate as your income tax rate.
However, there are some differences in how taxes are calculated depending on whether you are classified as a trader or an investor. The details of these variations are somewhat subtle and can be confusing for beginners.
