Highlights
- Cryptocurrency is an investment asset that is subject to tax.
- An investor is more likely to pay less tax than a trader.
- What is taxed is capital gains and you get a capital gains discount if your investment is long-term.
'May PERAan' is SBS Filipino's new podcast series which features financial experts seeking to answer the most common questions about money and finances.
"Cryptocurrency promises good returns in the future. We're hoping that it becomes legal tender in Australia," accountant Romulae Gadaoni shares.
But before cryptocurrency becomes legal tender in Australia, it's an investment that will affect your income tax.
Listen to the podcast
LISTEN TO
Nakaka-apekto ba sa income tax ang aking cryptocurrency investments?
SBS Filipino
05/10/202111:02
Do I need to pay taxes on my cryptocurrency investment?
According to Romulae, cryptocurrency is an investment asset and is therefore subject to tax.
"What you earn from work, business (if you are a sole trader) and cryptocurrency will be considered as your income. Your tax will be based on your marginal tax rate.
"Taxes in Australia are high. If you earn a lot, you can even be taxed as much as half your income."
What is capital gains tax?
"When you invest in cryptocurrency, what is taxed is the capital gains, meaning what you earn. When you lose money, you call that capital loss."
How does tax differ between investor and trader?
As an investor, you buy an asset. Your hope is that the value of your asset appreciates.
On the other hand, as an investor, you buy and sell assets. Once you earn from an asset, you sell it. Your likely intention is to keep your money in the investment in the short-term.
"Whether you're a trader or investor, you are taxed; but if it's a long-term investment (say for around a year), we have what is called a capital gains discount," Romulae shares.
"When you're a trader, you will generally pay more tax compared to an investor."
Is there a strategy when it comes to cryptocurrency and taxes?
According to Romulae, "Hold your investment for at least a year for a capital gains discount. You can also structure your investment by building an investment company, but this will depends on your earnings."
"Remember to consult with your accountant and do proper record keeping."
ALSO READ / LISTEN TO
Disclaimer: This article is for general information only. For specific financial advice, you should consider seeking independent legal, financial, taxation or other advice to check how the information here relates to your unique circumstances.
