Cryptocurrencies have skyrocketed in terms of relevance and reward in just a few years – and the rise of crypto doesn’t seem to be stopping any time soon.
Understanding your tax obligations is essential in managing your wealth. While the ATO has published official guidelines on how crypto will be taxed, you can implement many strategies to reduce your tax burden.
The expert crypto accountants at Valles have outlined successful ways in which you can reduce tax on cryptocurrency in Australia. Read on to find out more.
Because the ATO considers cryptocurrency an asset, holding onto it for more than 12 months will make you eligible for the Capital Gains Tax (CGT) discount.
Like any normal capital gain, the 50% Capital Gains Tax rule applies to cryptocurrency. This means that when you sell or dispose of an asset, you can reduce your capital gain by 50% – allowing you to decrease your taxes and manage your overall wealth.
Hence, if you are classified as a “crypto investor” – usually referred to as someone who holds onto cryptocurrency for a long time in hopes of long-term gain – then the CGT discount is perfect for you.
Reducing the amount of tax you pay on cryptocurrency requires managing your finances and keeping track of your spending.
When investing in cryptocurrency, you can deduct items on your tax return. This includes:
If you have engaged in any of these activities while investing in crypto, then be sure to make the most of your reductions when lodging your tax return.
There’s no way to “avoid’ tax in any regard, and this also includes cryptocurrency.
Make sure you’re being truthful in terms of your crypto activity to steer clear of any implications with the law. It is essential to understand that all transactions leave behind a digital footprint and will be noticed by the ATO whether they are disclosed or not.
Hence, the amount of money you pay to the ATO revolves around how open you are about your crypto activity.
By choosing not to disclose activity, you risk attaining severe interest charges and penalties – meaning you’ll be paying more than what was required with your basic tax run. Therefore, while reducing your taxes may seem appealing, you will have to do it in a way that is legal and fair.
Cryptocurrency is still relatively new and various issues need to be addressed when attempting to reduce your tax as a crypto investor.
At Valles, we’re experts in all areas of crypto. We offer our clients comprehensive and reliable cryptocurrency tax advice that will continue to help them throughout their investing journey. This includes valuable tips on how to successfully reduce the amount of tax you pay and ensure you don’t fall into any financial liability.
Choose Valles as your team that stays up to date with everything in the world of cryptocurrency.
Wondering how to apply practical tax management skills when investing in crypto? Let the team at Valles Accountants help you reduce tax on cryptocurrency and assist you in attaining long-term financial success. For more information on wealth management tips, contact us today