Bitcoin trading and your tax obligations !

Doing nothing or thinking you will not be detected when it comes to meeting your tax obligations with crypto currencies is not an option!

Yesterday, being the 3rd of April passing the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2017 (Amendment Act) was enacted as Law.  The new Act will impose obligations on digital currency exchange providers (Providers) including requirements to register with AUSTRAC. The most significant measure contained in the new law is to bring digital currency exchange providers such as Bitcoin under the AML (Anti-Money Laundering )(/CTF regime.

The Providers will also need to maintain a compliant Anti-Money Laundering and Counter-Terrorism Financing Program (AML Program).

The Providers will in simple terms need to:

  • Understand and undertake background check on their clients
  • Will be obligated to report to AUSTRAC suspicious matters and threshold transactions when relevant
  • Report transactions above $10,000 thresh-hold.


Throughout the world, Governments are watching closely at this new industry as some try and take advantage of money laundering and tax evasion. There are harsh penalties for non- compliance including jail time in some instances.

What does this mean to our clients who trade in Bitcoin?

The ATO is still seeking submissions for the tax treatment of Bitcoin transactions. In essence, it can be treated as a capital investment subject to CGT rules or as a business subject to income tax rules. At this stage we suggest that you follow the bookkeeping rules issued by the ATO as follows:

Per ATO website

You need to keep the following records about your cryptocurrency transactions:

  • the date of the transactions
  • the value of the cryptocurrency in Australian dollars at the time of the transaction (which can be taken from a reputable online exchange)
  • what the transaction was for and who the other party was (even if it’s their cryptocurrency address).

Are you in the business of Bitcoin trading or an investor?

Not everyone will be in the business of Bitcoin trading. Indications as per the ATO  that you are running a bitcoin business include such examples of businesses that involve cryptocurrency include:

  • cryptocurrency traders
  • cryptocurrency mining businesses
  • cryptocurrency exchange businesses (including ATMs).
About Geoff Gartly

Geoff has been assisting businesses with their taxation and business affairs for many years. His practical advice has assisted his clients to grow their businesses and plan their financial future. To contact Geoff please call 039597 9966