Australian resident for tax purposes
If you're an Australian resident for tax purposes, you must pay tax in Australia on all of your income and capital gains from crypto assets. This applies regardless of where they are sourced.
Foreign resident for tax purposes
If you're a foreign resident for tax purposes and you make Australian-sourced income from a crypto asset transaction, you need to pay tax in Australia on that income.
Crypto assets don't have a physical location. You will need to determine the source. To do this you need to look at the relevant facts, including:
- where the activity, trade, employment or service was performed
- location of the platform or exchange
- location of payer and payee.
Keep records relating to any income you receive from crypto assets.
Example: Australian-sourced income from crypto assets
Malcolm is a Scottish resident for tax purposes. His daughter, who lives in Australia, acts as his agent and portfolio manager. She executes a high volume of sophisticated crypto asset trades on his behalf.
Malcolm provides the capital for these trades and receives a portion of the profits, while his daughter performs all the trading activities from Australia. He derives this income from these transactions on revenue account.
Because the trading is conducted in Australia, the income Malcolm earns from these transactions is considered Australian-sourced income. As a result, Malcolm is liable to pay tax in Australia on this income.
End of exampleForeign residents and CGT from crypto assets
If you're a foreign resident for tax purposes, you may have to pay capital gains tax (CGT) in Australia for crypto assets that are taxable Australian property (TAP). A crypto asset may become TAP where you stop being an Australian resident and choose to disregard a capital gain or capital loss made under CGT event I1.
If you’re a resident of a country that has a tax treaty with Australia, you will need to consider if a treaty applies to your circumstances. For more information, see Foreign residents and capital gains tax.
Example: ceasing to be an Australian resident
Emma is an Australian resident for tax purposes living in Australia. During this time she spends $10,000 to buy Bitcoin. Then 2 years later, Emma permanently relocates overseas and stops being an Australian resident.
Emma needs to work out the market value of the Bitcoin on the date she stops being an Australian resident. Emma uses a reliable source to work out the market value of her Bitcoin as $22,000.
CGT event I1 happens in relation to the Bitcoin. Emma makes a capital gain of $12,000 ($22,000 market value − $10,000 cost base) in the income year she stops being a resident.
Emma has the option of disregarding the capital gain at that time. If she does this, her Bitcoin will be taken to be taxable Australian property with a cost base of $10,000.
Emma chooses to disregard the $12,000 capital gain at the time she stops being an Australia resident. However, 3 years later Emma sells her Bitcoin for $52,000. Emma's capital gain is calculated as:
- $52,000 (capital proceeds) − $10,000 (cost base) = $42,000 (capital gain).
Emma will need to pay CGT in Australia on her capital gain on the disposal of her Bitcoin. She will need to consider whether her country of residence has a tax treaty with Australia and how this applies to her circumstances.
End of example