You can use crypto assets in various ways, including transactions using gift cards or debit cards. This may include:
- using crypto assets to acquire a gift card
- loading or topping up a gift or debit card using crypto assets
- using a gift or debit card that is denominated in crypto assets.
To work out if your crypto assets are personal use assets when used in transactions to acquire a gift card or debit card, which is then used to acquire items for personal use or consumption, see Crypto asset as a personal use asset.
A CGT event happens where you use crypto assets to acquire a gift card.
The CGT event happens irrespective of whether the gift card is denominated in Australian Dollars (AUD) or crypto assets. The capital proceeds for the CGT event equal the market value of the gift card when it is acquired.
Example: acquiring a gift card with crypto assets
Raj buys 50 ABC tokens for $50. Raj later uses these tokens to buy a $100 gift card.
A CGT event happens when Raj buys the gift card, as he disposes of 50 ABC tokens in exchange for the gift card.
Raj has a capital gain of $50.End of example
A CGT event happens when loading or topping up a gift or debit card using crypto assets.
For example, if you transfer crypto assets to the digital wallet of the gift or debit card provider for loading or topping up, this is a disposal of the crypto asset for CGT purposes. The proceeds for the CGT event equal the amount by which the available balance of the card is increased. That is, the value associated with loading or topping up of the card.
Example: loading a debit card using crypto assets
Yindi has a debit card that is linked to her crypto wallet. Yindi uses her debit card to buy a television for $2,000.
The debit card provider draws crypto assets from Yindi's crypto wallet and converts them to AUD to pay to the merchant.
The capital proceeds for the disposal of crypto assets are $2,000.End of example
Where a gift or debit card is denominated in crypto assets, the AUD value of the available balance changes as the price of the crypto asset changes. In these circumstances, you must calculate whether a capital gain or capital loss (or neither) results from transactions using the card.
Example: using a gift card denominated in crypto assets
Olivia has a gift card denominated in XRP (a type of crypto asset). Olivia paid 500 XRP to acquire the gift card and it has an available balance of 500 XRP.
At the time Olivia acquired the gift card, XRP had a market value of $1.
Olivia uses the gift card to buy a guitar costing 400 XRP.
At the time Olivia acquires the guitar, XRP had a market value of $0.95. Olivia has a capital loss of $20 and a remaining balance of 100 XRP on the gift card.End of example