The interest in cryptocurrencies has risen just as fast as the Bitcoin price.
Whilst Warren Buffett says it’s a load of rubbish that hasn’t stopped millions of Aussies being interested in buying Crypto just like Bitcoin. Who doesn’t want a piece of the action when they see an asset sky rocket in price.
Now I can espouse the virtues and risks of trading an asset that has no physical business backing it, or I can highlight the extreme volatility or the ease at which many investors have been hacked and robbed, but people will only listen to what they want to hear.
In the meantime, if you insist on investing in crypto, this is what you need to know.
So here’s five tips to buy and sell crypto;
- Firstly, the tax office doesn’t classify crypto as currency- weird huh. The tax office classifies crypto as ‘property’.
- Crypto being classified as property allows it to be taxed like any other property and thus subject to capital gains tax (CGT). Property is classified as investment properties, stocks or similar investment assets.
- Just like investment property, if you own crypto longer than 12 months you may exercise the 50% capital gains tax discount. If you own it less than 12 months, you will pay tax on the full gains.
- If you make a loss from your crypto investment, that loss can be recorded and offset against future gains.
- The tax office is sending out ‘love letters’ to crypto holders reminding them of their obligations to keep accurate records. For example, it’s important to know the buy price, sale price, buy date, sale date and any other records relevant for tax purposes.
Getting it wrong can be expensive.
If you’re investing in crypto and need more information, then drop me a line or DM me on the links below.