Cryptocurrency CGT Implications and Record Keeping Requirements
Are you trading in cryptocurrencies such as Bitcoin, Ethereum or UTrust?
You may be liable to pay CGT (Capital Gains Tax) on transactions in the financial year.
The ATO has declared in its Tax Determination 2014/26 that Bitcoin, and cryptocurrencies of similar
nature (‘Altcoins’), are a CGT asset, and the disposal will give rise to a CGT event which may produce
a capital gain or loss.
According to the ATO a CGT event occurs when an individual disposes of their cryptocurrency
- Selling cryptocurrency,
- Trading cryptocurrency,
- Exchanging cryptocurrency,
- Converting cryptocurrency into fiat currency, and
- Using cryptocurrency to obtain goods and services.
If you make a capital gain on the disposal of a cryptocurrency, some or all of the gain may be taxed.
However, certain capital gains or losses that arise from the disposal of cryptocurrency that are a
‘personal use asset’ may be disregarded.
When cryptocurrency is considered a personal use asset
If the value of the cryptocurrency acquired, kept or used, is less than $10,000 and used
mainly to purchase items for personal use or consumption.
If you acquire, keep or use cryptocurrency as an investment, in a profit-making scheme, or in
the course of carrying on a business, your disposal of your cryptocurrency will result in a CGT
If you have acquired cryptocurrency as an investment, you will not be entitled to the personal use
asset exemption and may be liable to pay CGT.
Record Keeping – What are your record keeping obligations?
The ATO requires you to keep the following records in relation to your cryptocurrency transactions:
- The date of the transaction,
- The value of the cryptocurrency in Australian dollars at the time of the transaction, and
- What the transaction was for and details of the other party in the transaction.
How to obtain and keep this information?
Most cryptocurrency transactions take place on recognised exchanges and usually hold the required
Some investors choose to use applications such as ‘Delta’ or various ‘crypto wallets’ to record the
details of their transactions and track their portfolio.
The ATO is currently undertaking community and stakeholder consultations with regards to practical
compliance issues arising from record-keeping requirements. The consultations will end on 20 April
If you require legal advice relating to transacting in cryptocurrencies please contact Longton Legal.