Taxing cryptocurrency winnings in AU
Introduction
In Australia, gambling winnings as a hobby are not subject to income tax, however cryptocurrency winnings create an additional capital gains tax (CGT) event. Let's figure out when and what operations are taxed, how to calculate the basis and what reports to submit.
1. Winning as a hobby: exemption from income tax
Gambling winnings (in AUD) from non-profit activities are not included in taxable income.
Crypto winnings when issuing tokens are also considered as "unprofessional winnings" and are not subject to income tax upon receipt.
2. Capital Gains Tax (CGT) and cryptocurrency
A cryptocurrency in Australia is considered a "capital asset." Any transfer or spending of it is a CGT event that requires the calculation of an increase or loss.
CGT event upon receipt: the very fact of receiving cryptocurrency by winning is not a CGT event, however, it sets a new "cost base" for future reports.
3. CGT events after winning
1. Convert to AUD
When removing or exchanging won BTC/ETH/USDT for fiat, a CGT event occurs:
Payment for goods and services with won tokens is also a CGT event, it is considered a sale: the increase is calculated relative to the basis.
3. Exchange for another crypt
In a BTC→ETH swap, a CGT event occurs: it is considered the sale of BTC and the purchase of ETH.
4. Calculation of the basis (cost base)
Winning date: At the time of payment of tokens, their market value is fixed in AUD - this is your cost base.
Included expenses: exchange/wallet commissions on receipt and subsequent transactions increase the cost base.
Example: won 0.01 BTC when course 1 BTC = A $80,000 → cost base = A $800; when selling for A $1000 gain = A $200.
5. Liberation of small amounts and simplified accounting methods
CGT-light method: for amounts up to the equivalent of A $10,000, the method "20% loss on claims" can be used without an accurate calculation of the increase.
Mini-CGT: with one-time small operations (buying crypto for one-time rates), the increase often does not exceed the thresholds that give mandatory reporting.
6. Reporting and Declaration
1. Record transactions: fix the date, type of transaction, number of tokens, rate in AUD and commissions.
2. Annual declaration: in the CGT section, indicate the total gains or losses on crypto operations.
3. Documents: statements from the wallet, screenshots of the course for the date of the operation, checks of the exchange.
Conclusion
Cryptocurrency winnings are not subject to income tax upon receipt if it is a hobby. However, any subsequent spending, exchanges or conversions of winnings into AUDs are CGT events. Record the market value of tokens at the time of winning as cost base, track all transactions and take into account gains or losses when filing a declaration. This will avoid fines and preserve the legality of your crypto gambling.
In Australia, gambling winnings as a hobby are not subject to income tax, however cryptocurrency winnings create an additional capital gains tax (CGT) event. Let's figure out when and what operations are taxed, how to calculate the basis and what reports to submit.
1. Winning as a hobby: exemption from income tax
Gambling winnings (in AUD) from non-profit activities are not included in taxable income.
Crypto winnings when issuing tokens are also considered as "unprofessional winnings" and are not subject to income tax upon receipt.
2. Capital Gains Tax (CGT) and cryptocurrency
A cryptocurrency in Australia is considered a "capital asset." Any transfer or spending of it is a CGT event that requires the calculation of an increase or loss.
CGT event upon receipt: the very fact of receiving cryptocurrency by winning is not a CGT event, however, it sets a new "cost base" for future reports.
3. CGT events after winning
1. Convert to AUD
When removing or exchanging won BTC/ETH/USDT for fiat, a CGT event occurs:
- $$
- \ text {Gain} =ext {Amount in AUD on sale} -ext {Cost base (AUD at the time of winning)}
- $$
- 2. Spending cryptocurrency
Payment for goods and services with won tokens is also a CGT event, it is considered a sale: the increase is calculated relative to the basis.
3. Exchange for another crypt
In a BTC→ETH swap, a CGT event occurs: it is considered the sale of BTC and the purchase of ETH.
4. Calculation of the basis (cost base)
Winning date: At the time of payment of tokens, their market value is fixed in AUD - this is your cost base.
Included expenses: exchange/wallet commissions on receipt and subsequent transactions increase the cost base.
Example: won 0.01 BTC when course 1 BTC = A $80,000 → cost base = A $800; when selling for A $1000 gain = A $200.
5. Liberation of small amounts and simplified accounting methods
CGT-light method: for amounts up to the equivalent of A $10,000, the method "20% loss on claims" can be used without an accurate calculation of the increase.
Mini-CGT: with one-time small operations (buying crypto for one-time rates), the increase often does not exceed the thresholds that give mandatory reporting.
6. Reporting and Declaration
1. Record transactions: fix the date, type of transaction, number of tokens, rate in AUD and commissions.
2. Annual declaration: in the CGT section, indicate the total gains or losses on crypto operations.
3. Documents: statements from the wallet, screenshots of the course for the date of the operation, checks of the exchange.
Conclusion
Cryptocurrency winnings are not subject to income tax upon receipt if it is a hobby. However, any subsequent spending, exchanges or conversions of winnings into AUDs are CGT events. Record the market value of tokens at the time of winning as cost base, track all transactions and take into account gains or losses when filing a declaration. This will avoid fines and preserve the legality of your crypto gambling.
