Tax Update – February

Client Update - February 2018

Tax Treatment of Bitcoin

With the recent fluctuations of cryptocurrencies, it is vital to understand the tax treatment of cryptocurrency (especially bitcoins!) gains and losses, and it depends on the intention of the purchase. For example, if the:

  1. Intention is to use it to buy goods and services for personal consumption – profit will be taxed under capital gains tax ruling; 50% concession is available if held for more than 12 months and any capital losses can be used to offset capital gains.

    However, if the Bitcoins were purchased for under $10,000, it will be exempt from CGT ruling as it is regarded as personal use asset and any gains or losses will be disregarded.

  1. Intention is to speculate in the hope of an increase in price – profit will be regarded as taxable income and will be tax at marginal rate as the individual views this as a profit-making scheme.

It’s crucial to understand that even though an individual may invest in cryptocurrency for less than $10,000, it may also be considered as buying with the intent of making a profit. The more frequent the individual trades will suggest a higher probability that the individual is investing for speculation, hence any profit or loss will be assessed as taxable income.

myDeductions – ATO App

To assist you at tax times, it is useful to download the ATO app to your smart device to keep track of your expenses and deductions throughout the year. You can use the tool as an individual, sole trader, or both, to record the following items:

  • deductions/expenses
  • vehicle trips
  • income (if you're a sole trader)
  • photos of your invoices and receipts.

 

Single Touch Payroll

Single Touch Payroll means employers will report payments such as salaries and wages, pay as you go (PAYG) withholding and super information to us directly from their payroll solution (payroll software) at the same time they pay their employees.

For employers with 20 or more employees on 1 April 2018, Single Touch Payroll reporting starts from 1 July 2018.

The Australian Government has announced it will expand Single Touch Payroll to include all employers from 1 July 2019.

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