Capital Gains Tax (CGT) A capital gains event only occurs when you do something with your crypto. If you only buy and hold, then you don't need to pay tax on your crypto, even if the value of your purchased coins has increased. If you make profit on a transaction, then you'll need to pay tax on your capital gain.
1 - Buy and Hodl your crypto investments for the long term
So one of the simplest strategies to avoid paying crypto taxes, is to simply buy and hold your crypto. Even if the value of your crypto portfolio increases each year, you won't have to pay tax until you sell. This strategy works best the longer you hold.
But in brief, your CoinSpot transactions may be subject to Capital Gains Tax or Income Tax, depending on the specific transaction: Capital Gains Tax: If you sold or swapped crypto - including NFTs - on CoinSpot, you'll pay Capital Gains Tax.
Deduct crypto mining expenses
Hobby mining in Australia is tax free upon receipt, so you won't pay Income Tax on mined coins when you receive them - but you will pay Capital Gains Tax when you later sell, trade, spend, or gift them. It's another story for those seen to be mining as a business though.
Under the data sharing program, the digital currency exchange must provide transaction data of their users to the ATO. In short, the ATO knows your transaction history on CoinSpot. You'll know the ATO has your cryptocurrency transaction data, as it will show in the prefill report on your tax return.
Designated service providers are bound by law to provide the ATO with requested information. That means the ATO has the 'know your customer' (KYC) information you provided when signing up for any Australian exchange or wallet. This includes personal information and transaction data like: Names.
The short answer is, the ATO already know when you're trading cryptocurrency. The ATO has developed a data matching program with cryptocurrency exchanges to ensure no cryptocurrency transaction sneaks through the cracks.
Buying cryptocurrency isn't a taxable event by itself. You can choose to buy and hold cryptocurrency for as long as you'd like without paying taxes on it, even if the value of your position increases.
Failure to declare crypto capital gains, where the ATO determines the taxpayer intentionally disregards the law, can attract a penalty of 75 per cent of the outstanding tax liability, plus the tax itself and interest on the shortfall.
If you've owned your crypto for less than 12 months , you subtract your cost base from your sale price. This final amount is reported at the 18A 'Net capital gains' label. Tax is then applied to your total assessable income (which includes things like wage and interest income) at your income tax rate.
If you hold an asset for over 12 months, you will only pay tax on 50% of your capital gain.
How do I set a Take Profit Order for Bitcoin? Select the price (Trigger) you would like to sell your Bitcoin if the market rate rises. Enter the quantity you would like to sell if the market rate rises to your selected price. Click 'Set Take Profit' to confirm your BTC Take Profit and your order will be created.
CoinSpot has been around since 2013 and has never been hacked, and it maintains industry best-practice by storing the vast majority of cryptocurrency in highly secure cold storage.
CoinSpot is Australia's largest crypto exchange, packed with features, and a massive range of 370+ coins.
It's important to note that in Australia, cryptocurrency transactions, including staking, are subject to taxation. Any income earned from cryptocurrency staking, including rewards, is considered taxable income and must be reported to the Australian Taxation Office (ATO).
Investors must report crypto gains, losses and income in their annual tax return on Form 8940 & Schedule D. Evading crypto taxes is a federal offence. Penalties for tax evasion are up to 75% of the tax due (maximum $100,000) and 5 years in jail.
You must report income, gain, or loss from all taxable transactions involving virtual currency on your Federal income tax return for the taxable year of the transaction, regardless of the amount or whether you receive a payee statement or information return.
The percentage of Income Tax you'll pay is the same as your personal Income Tax rate, starting only from earnings above $18,201. But if you hold for a year, you'll receive a 50% discount on your capital gains for that particular asset.
You owe taxes on any amount of profit or income, even $1. Crypto exchanges are required to report income of more than $600 for activities like staking, but you still are required to pay taxes on smaller amounts.
In addition, major exchanges issue 1099 forms to customers and to the IRS reporting on your crypto transaction activity. If you don't report transactions that have been reported to the IRS via Form 1099, you may automatically be sent a warning letter about your unpaid tax liability.
When you sell your crypto at a loss, it can be used to offset other capital gains in the current tax year, and potentially in future years, too. If your capital losses are greater than your gains, up to $3,000 of them can then be deducted from your taxable income ($1,500 if you're married, filing separately).
CoinSpot is an ideal choice for both beginners and intermediate traders who prioritise a simple, user-friendly interface, a large variety of tradable coins, and a secure platform.
Bitcoin, contrary to popular belief, is traceable. While your identity is not directly linked to your Bitcoin address, all transactions are public and recorded on the blockchain. So, while your name is not attached to your address, your address is attached to your transaction history.
The IRS treats cryptocurrency as “property.” If you buy, sell or exchange cryptocurrency, you're likely on the hook for paying crypto taxes. Reporting your crypto activity requires using Form 1040 Schedule D as your crypto tax form to reconcile your capital gains and losses and Form 8949 if necessary.