As cryptocurrencies gather momentum among investors, it is no surprise that both the public and the ATO are turning their thoughts towards those who invest in this digital asset.


While the task of addressing the tax treatment of each cryptocurrency is beyond the scope of this article, set out below is a summary of the tax treatment of Bitcoin and other crypto or digital currencies that have similar characteristics.

The important messages to take away are:

  • Given the recent sustained upward movement in value of Bitcoin, don’t assume that the profit on Bitcoin transactions is not taxable or not subject to CGT. Even if gains from Bitcoin transactions are not reported, the ATO may issue amended or default assessments if they believe a taxpayer is living beyond their means,
  • Those who invested in very recent times where the value of Bitcoin has fallen may make losses that are deductible if there was a profit-making intention on acquisition, and;
  • Clear records of transactions, activities and the intentions behind them must be kept, particularly if Bitcoin is purchased both for personal use and for speculative gain.

Source: CHH Tax Week Issue 48