Beginner’s Guide To Cryptocurrency Tax In Australia

If you’ve been trading cryptocurrencies, you may have to report it on your tax return. Working out your cryptocurrency tax can be complicated, and there are a lot of different factors you need to consider when preparing your tax return. To help you out, we have developed a quick guide to break down everything you need to know about cryptocurrency and tax in Australia.

 

What are cryptocurrencies? 

Simply put, cryptocurrency is a new form of digital money that operates on blockchain technology. They don’t physically exist. Like regular cash, digital currencies are accepted as a means of payment and can be used to purchase goods and services online. Bitcoin is the most popular cryptocurrency, but there are many others out there.

 

How they work

The Australian Tax Office (ATO) classifies cryptocurrency as an asset; therefore, you will need to assess your Capital Gains Tax every time you trade, sell or give away your cryptocurrency. Cryptocurrencies are subject to Capital Gains Tax (CGT) and income tax, however, exempt from the Goods and Services Tax (GST).

Capital gains are the tax you pay when you make a profit on a transaction. For example, if you buy a Bitcoin for $3,000 and sell it six months later for $5,000 then you’ve made a capital gain of $2,000 and will need to pay tax on that amount.

On the other hand, when cryptocurrency service providers send free coins to users (also known as airdrops), this can trigger income tax. The value of those coins must be declared as ordinary income.

 

How does the ATO figure out how much crypto tax I owe? 

In late 2019, the ATO started collecting records from Australian cryptocurrency service providers to ensure people were tax compliant. Each time you make a transaction, there is an electronic record that is reported to the ATO from your service provider. That’s why it’s more important than ever to know what you’re doing and report your income correctly.

 

Am I an Investor or Trader?

The first thing you need to do is to determine whether you’re classified as an investor or trader by the ATO.

An investor is someone who buys and sells cryptocurrency for long-term personal gain. The majority of people who engage in cryptocurrency are considered to be investors, therefore their transactions are subject to Capital Gains Tax.

On the other hand, a trader is someone who carries on a business to earn income from buying and selling cryptocurrency. Rather than putting a value on capital gains, they treat their profits as business income instead. For traders, different Income Tax rules apply compared to Investor CGT Events.

 

To give you a better understanding, in each scenario below, we determine the type of tax liability that applies.

Buying Cryptocurrency – There are no taxes involved when you buy cryptocurrency in Australian Dollars.

Selling Cryptocurrency – Selling cryptocurrency will trigger Capital Gains Tax. Capital gains or loss can be calculated by subtracting the amount you paid for a cryptocurrency from the amount you sold it for. This figure forms part of your income and needs to be declared on your tax return.

Trading Crypto for Crypto – Buying one cryptocurrency with another will trigger Capital Gains Tax. The ATO sees a trade as two separate transactions, first, you are selling your cryptocurrency for X amount, then buying another with those earnings. So, even though you never receive the money in hand, you still need to pay tax on the sale.

Gifting Cryptocurrency – Gifting crypto is considered the same as selling it, so it is a taxable event and subject to the Capital Gains Tax. You don’t have to pay taxes when you receive cryptocurrency as a gift. However, you will be subject to the Capital Gains Tax when you dispose of the gifted cryptocurrency.

 

What records do I need to keep?

Whether you’re an investor or a trader you need to keep clear records, including the following information:

  • The value of the transaction
  • The date the transaction was completed
  • The purpose of the transaction
  • The details of the other party involved

Examples of useful records to keep include:

  • Receipts of your cryptocurrency purchase
  • Records of agent, accountant, and legal costs
  • Exchange records
  • Digital wallet records
  • Software costs associated with the management of your tax affairs

 

Where do I keep these records? 

There are a number of different cryptocurrencies tracking software available in the marketplace that can help you keep track of all your transactions. (CoinTracker is one example of no doubt many – however, please be aware we are not recommending this product. You should conduct your own research and investigations before deciding on a specific product).

If you need assistance with your tax return or need more information about how cryptocurrencies may affect your taxes, please contact The Hrkac Accounting Team on 03 5224 2366.

Liability limited by a scheme approved under Professional Standards Legislation.

It’s that time of year again, and although it’s been a bumpy 2020 so far, your tax appointment doesn’t need to be stressful. If you’re prepared with the right paperwork, receipts, and statement information, you are on track for a hassle-free appointment with the Hrkac Group Accounting team.

Our Accounting team has prepared some handy checklists for both Personal and Business tax return appointments. You can use these as a guide for what you might need to bring with you/have them handy for your appointment this year.

 

Personal Tax Return Checklist

Top items to bring:

  • A copy of last year’s Tax Return
  • PAYG/Group Certificates
  • Receipts for claims/deductions
  • Self-Education costs
  • Private Health Insurance Annual Taxation Statement

Download the full checklist here:

Working from home?

If you have been working from home over the past few months, you may be able to claim work-related expenses on your tax return.

For more information on what you can and can’t claim, visit the ATO website:

Working from Home Information.

Business Tax Return Checklist

Top items to bring:

  • Back up or invite your Hrkac Accounting specialists to your accounting program
  • Capital purchase documentation
  • Payroll records

Not all items on these checklists may apply to your return and you don’t have to bring these to your appointment, but they can be handy to keep on file for next year. If you are unsure about any of the items on the checklist, bring as much information as you can to your appointment, and we can help you know what is relevant to your tax return.

Book online

The Hrkac Group is ready to take your Tax Return appointments for 2020, whether it be in person, over the phone or via video call – the choice is yours.

You can make your appointment online with John, James, Shane or Linda by clicking the button below.

When you arrive for your appointment, please take the time to read our COVID-19 policy notice at the entrance, before entering. We ask if you are feeling unwell, to please reschedule your in person appointment to a later date or contact our office to change your appointment to a Zoom/Phone appointment.

Liability limited by a scheme approved under Professional Standards Legislation.

As we’re gearing up for our busy period, we want to make sure your preparation for this year’s Tax Return appointment is easy and hassle free. From experience, providing the right paperwork, receipts and statement information is the key to ensuring you get the best out of your Tax Return appointment. With this in mind, our Accounting specialists have gathered together an informative checklist you can use as a guide.

Anyone can use our business or personal tax return checklists to prepare for their appointment – flag it in your inbox, bookmark it or even print it out. You can keep coming back to these guides, so you know what to bring to make your appointment run smoothly.

 

Personal Tax Return Checklist

Some important items to remember:

  • A copy of last year’s Tax Return
  • PAYG/Group Certificates
  • Receipts for claims/deductions
  • Self-Education costs
  • Private Health Insurance Annual Taxation Statement

Business Tax Return Checklist

Some important items to remember:

  • Back up or invite your Hrkac Accounting specialists to your accounting program
  • Capital purchase documentation
  • Payroll records

Download

 

Not all items on these checklists may apply to your return and you don’t have to bring these to your appointment, but they can be handy to keep on file for next year. If you are unsure about any of the items on the checklist, bring as much information as you can to your appointment, and we can help you know what is relevant to your tax return.


This year, The Hrkac Group is taking online bookings for Tax Return appointments. You can use the link below to book your appointment online or use the top right button on our website whenever you’re ready.

Top Tip 2019:

Although technology is helping us improve our taxation processes, we don’t always have online access to the most up to date information available.

It’s important to bring your Group Certificate to this year’s appointment so that we can work with the correct and most recent information (we can’t always access your certificates online.)

If you have any questions or would like to book your Tax Return appointment, please contact The Hrkac Group here.

 

Liability limited by a scheme approved under Professional Standards Legislation.

Single Touch Payroll (STP) is a way of streamlining tax and super information to the ATO from your payroll or accounting software. Designed to provide ‘real-time reporting solutions, the implementation of STP will mean employers will now report figures at the time of payroll, and employees can access year-to-date tax and superannuation details as they require them.

So what does this mean for employers and employees alike?

 

For the Employers

All businesses will be required to comply with Single Touch Payroll from 1st July 2019. In the coming months, we will see new software solutions and options enter the market. Early adoption is possible, and some businesses may have seen this already as providers have begun rolling out new software options for those businesses wanting to uptake this method of data processing. Businesses utilising STP will be able to report employees’ salaries and wages, allowances, deductions (for example, workplace giving) and other payments, pay as you go (PAYG) withholding, and superannuation information, while eliminating the need to provide end of year payment summaries.

 

For Employees

The main change for employees is the introduction of real-time reporting meaning we will slowly see the reduced need for EOFY PAYG Withholding Payment Summary. This information will now be available via your myGov account, allowing access to year-to-date taxation summaries and super information, continuously being updated in real-time as your employer pays you. You will also be able to continually check your super contributions and receive your tax-ready payment summary information (income statement) via myGov.

For more information, visit the ATO website.

Follow our handy Personal and Business Tax Time Checklists to make sure you’re prepared.

So it’s that time of year yet again! If you are new to lodging a tax return or if you are a new Start-Up Business or Sole trader/contractor – even if you’ve been doing it for years – getting all of your financial documentation together can be a daunting task.

If you just don’t know where to start, the Hrkac Group are here to help. We strive to take the guesswork out of Tax time and have put together helpful checklists for both personal and business taxation clients, so that you can be confident that you have everything in order.

For those looking to lodge a personal tax return, here is a list of some of the items required by your registered tax agent:

  • A Copy of your previous years income tax returns (new clients only)
  • PAYG payment summaries Group Certificates
  • Dividends and other investment income
  • All Rental Property Information
  • Receipts for any possible claims/deductions including:
  • Motor Vehicle expenses
  • Any Travel expenses
  • Uniform purchases and Laundry costs
  • Self Education Costs
  • Any Work related expenditures
  • Tax agent fees paid during last financial year (new clients only)
  • Your account bank details for any refund
  • Any Gifts or Donations
  • Income Protection premiums paid
  • Private Health Insurance Annual Taxation Statement

For those of you running a business, here is a list of some of the items required by your registered tax agent:

  • Backup or invite your agent to join your Accounting program
  • (i.e MYOB/Reckon/Quickbooks/Xero)
  • Bank Statements for all business accounts including loan statements
  • Documentation for any new Capital purchases such as Motor Vehicles or properties
  • Trade Debtors listing as at the end of the period
  • Trade Creditors listing as at the end of the period
  • Detailed payroll records
  • Do you have any carried forward capital losses? If yes, how much

New clients will also need:

  • a copy of most recent years financials and tax returns
  • Previous accounting fees paid
  • Personal and business details

Download our Personal Tax Checklist or our Business Tax Checklist here!

If you would like to know more or to make a time to see one of our Geelong based Personal or Business Tax Specialists, feel free to contact the Hrkac Group today!

Are you an employer? Are you aware of the recent changes?

As of October 1st 2016 the ATO have put out changes to the PAYG withholding tax rate for employees earning over $80,000 a year.

These changes see the 32.5% Tax threshold increase from $80,000 to  $87,000 in the withholding schedules as a result of  personal income tax relief changes.

If any extra tax was withheld from your employees before the rate change on October 1st, your employees will be credited when they lodge their 2016-17 income tax returns. No employer adjustment or refund is required.

Feel free to contact us at The Hrkac Group for advice on these PAYG tax rate changes and download the updated tax rate tables here.

Follow our handy Personal and Business Tax Time Checklists to make sure you have everything in order.

So it’s that time of year again! For some it has become like driving a car or riding a bike, you just go into autopilot and you can get everything in order without breaking a sweat. For others, in particular those that are new to lodging a tax return or for a new Start-Up Business or Sole trader/contractor, it can be a daunting task. Where do you just don’t know where to start?

Luckily at the Hrkac Group, we strive to take the guess work out of Tax time, and have put together some helpful hints, so you know that you have everything in order.

For those looking to lodge a personal tax return, here is a list of some of the items required by your registered tax agent:

  • A Copy of your previous years income tax returns (new clients only)
  • PAYG payment summaries Group Certificates
  • Dividends and other investment income
  • All Rental Property Information
  • Receipts for any possible claims/deductions including:
  • Motor Vehicle
  • Any Travel expenses
  • Uniform purchases and Laundry costs
  • Self Education Costs
  • Any Work related expenditures
  • Tax agent fees paid during last financial year (new clients only)
  • Your account bank details for any refund
  • Any Gifts or Donations
  • Income Protection premiums paid
  • Private Health Insurance Annual Taxation Statement

For those who own a business, here is a list of some of the items required by your registered tax agent:

  • Backup or invite your agent to join your Accounting program
    (i.e MYOB/Reckon/Quickbooks/Xero)
  • Bank Statements for all business accounts including loan statements
  • Documentation for any new Capital purchases such as Motor Vehicles or properties
  • Trade Debtors listing as at the end of the period
  • Trade Creditors listing as at the end of the period
  • Detailed payroll records
  • Do you have any carried forward capital losses? If yes, how much

New clients will also need:

  • a copy of most recent years financials and tax returns
  • Previous accounting fees paid
  • Personal and business details

 

Download the version of our Personal Tax Checklist or our Business Tax Checklist here!

If you would like to know more or to make a time to see one of our Geelong based Personal or Business Tax Specialists, feel free to contact the Hrkac Group today!

What to look out for to ensure you’re not falling victim.

Have you received emails, phone calls or letters from the Australian Tax Office, demanding payments for outstanding tax bills using iTunes cards? Be careful, these could be part of a new sophisticated tax scam defrauding Australians.

Typically, when emails are used as correspondence, these emails contain links to fake websites that look remarkably genuine and may have attachments containing system-corrupting Malware or, in some cases, “Ransomware” which seeks payment for unlocking access to your own computer files.

Little can be done to stop scams such as these, with the criminals responsible often being based offshore and using techniques that are near-on impossible to trace by local authorities.

As your authorised Tax Agent, contact from the ATO about your taxation affairs should always come via our office. In particular the Australian Tax Office DOES NOT make phone calls soliciting payments for outstanding debt without first writing to taxpayers. Should you receive any direct contact purporting to be from the ATO, notify us immediately and we will work to verify it as genuine. Alternatively you can take matter up directly with the ATO in 1800 008 540.

Under NO circumstances should you pay an alleged Tax Debt without establishing its validity with us first.

Follow the link here to read the Tasmanian Police Media release. Follow the link here to read the Australian Tax Office Media Release.

If you have any queries or concerns or feel you may have been caught up in this scam, feel free to contact one of the Geelong based Tax specialists at The Hrkac Group.

What has changed and what you need to know.

In early November the Federal Government passed a bill to make an amendment to legislation regarding the repayment of Fee HELP/HECS Loans for those people who have moved overseas.

Previously, the legislation was that If you went overseas and said that you were no longer an Australian tax resident, i.e. you had no intention of ever returning to Australia (different to being an Australian citizen); your HELP/HECS Debt would just sit there regardless of what you earn overseas. If you never returned to Australia, you would never repay your debt.

Under the new amendment, regardless of whether you are an Australian Tax Resident or not; if you have a HELP/HECS debt and total worldwide earnings are over the relevant Australian Taxable income threshold; you are now required to make repayment under Australian law.

The following bills passed the Senate without amendments:

Education Legislation Amendment (Overseas Debt Recovery) Bill 2015 and Student Loans (Overseas Debtors Repayment Levy) Bill 2015 .

The Bills propose amendments to implement a 2015-16 Budget proposal to ensure that the same debt repayment obligations that apply to debtors who live in Australia apply to those who live overseas.

The Overseas Debt Recovery Bill will create an obligation to make repayments on their HELP and TSL debts based on their total Australian and foreign-sourced income, known as their worldwide income. This will be imposed as a levy (to be known as the “overseas debtors repayment levy”) through the other Bill.

If you would like to know more about how this may impact you either currently or in the future, feel free to contact one of our Geelong-based Tax specialists!

Get in fast to ensure you receive the Tax Agents lodgement extension for your Income Tax Returns for the financial year ended 30th June 2014*.

If you notify the Australian Taxation Office (ATO) of your appointment of an Accounting tax agent before 31st October 2014, you may be eligible for the tax agent’s extension up until May 2015.

So there is no better time than now to lock in The Hrkac Group’s Taxation Services to look after all your Accounting needs.

*To be eligible for the tax agent’s extension, all prior years’ tax must be up to date.

Proposed reduction in Victorian Payroll Tax from 1st July, 2014 from 4.90% to 4.85%.

Geelong’s The Hrkac Group Accounting team are always up to date with our knowledge of the Victorian State Payroll Tax legislation. Geelong’s The Hrkac Group can help with your Payroll Tax needs including assisting with preparation of your annual Payroll Tax Returns due on the 21st July, 2014. With our excellent Taxation Services team you’ll be more than pleased with yourself that you choose The Hrkac Group.

Geelong’s leading Finance and Conveyancing team can also assist with reviewing your first home buyer finance eligibility. We can also discuss and assist with all your conveyancing needs to ensure you receive the maximum outcome.

Please don’t hesitate to Contact Us via e-mail or phone 03 5221 2355 if you have any queries.

Planning is essential for you to achieve the optimal Tax outcome.

The Hrkac Group, located in the heart of Geelong, is ready to assist with all your Tax Planning needs.

There is still a little time left to take advantage of any Tax Planning strategies that may be applicable to you before another Financial Year comes to a close. However we suggest that you act now to have any strategies in place well before the 30th June.

So act now! Please contact one of The Hrkac Group Geelong Financial Services specialists today via Contact Us, email or phone 03 5221 2355.