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If you hold cryptocurrency for sale or exchange in the ordinary course of your business the trading stock rules apply, and not the CGT rules. Proceeds from the sale of cryptocurrency held as trading stock in a business are ordinary income, and the cost of acquiring cryptocurrency held as trading stock is deductible.
Examples of businesses that involve cryptocurrency include:
Not all people acquiring and disposing of cryptocurrency will be carrying on businesses. To be carrying on business, you will usually:
There is also usually repetition and regularity to your business activities, although one-off transactions can amount to a business in some cases.
Whether you are carrying on a business and when the business commences are important pieces of information. If you’re still setting up or preparing to go into business, you might not yet have started the business.
Money received (or property received) prior to a business being carried on is not generally assessable income. Likewise, you can’t claim deductions incurred prior to the business being carried on.
Remember, we are here to help you with your tax and BAS. Contact us on 0481 953 556 or email us at firstname.lastname@example.org to find out more.
Source: Ato.gov.au.2021. Cryptocurrency used in business. Link available here