Cryptocurrencies are becoming increasingly popular and with more of us investing in them, it is now important for us to understand how they are taxed and the ATO’s view on these.

Cryptos are regarded as a capital gains tax (CGT) asset so CGT applies on the disposal. However, transactions are exempt from capital gains tax if:

• they are used to pay for goods or services for personal use – e.g. Travel and food, and

• the cost of them are used to pay for the transaction is less than $10,000 (this is the exemption for personal use assets).

If the cost of the crypto used in the transaction exceeds $10,000, the personal use exemption will not be available and CGT will apply. The capital gain will be the sale price less the purchase price.

If you are buying and selling cryptos, then your profits will be treated as assessable income.

If you are paid in cryptos for goods or services provided as part of a business, you will need to record the value in Australian dollars as part of your ordinary income for tax purposes. The value in Australian dollars will be the fair market value which can be obtained from a reputable exchange. Similarly, when you use cryptos to purchase items.

Record keeping. You must keep the following:

• the date of each transaction

• the amount in Australian dollars at the time of the transaction (which can be taken from a reputable online exchange)

• what the transaction was for, and

• details of the other party

In simple terms cryptos are treated much like shares. If you are buying and selling then it will be assessable income, if you are buying and holding for the long term then you will have a CGT asset.