1052153837920 | Legal database

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Edited version of private advice

Authorisation Number: 1052153837920

Date of advice: 11 August 2023

Ruling

Subject: Am I in business? - cryptocurrency trading

Question

Is the profit from your cryptocurrency activities assessable under 6-5 of the Income Tax Assessment 1997 (ITAA 1997) for the relevant financial years?

Answer

Yes.

Weighing up all the relevant indicators in TR 97/11 Income tax: am I carrying on a business of primary production? against the context of your situation, it is considered that you were carrying on a business of Cryptocurrency trading for the relevant financial years.

The factors or indicators that give the overall impression that you are carrying on a business of cryptocurrency trading are as follows:

• The high level of transactions, along with regularity and repetition that you have completed shows that your activity has a commercial purpose.

• You have a trading strategy to limit any losses and to maintain your capital with a low stop loss percentage.

• Whilst you have incurred losses with your trading strategy in place your activity does have a potential for profit.

• You invested a substantial amount of capital into the activity.

• Your trading activity is organised and carried on a businesslike manner, with records being kept

• You engage with seasoned traders and frequently keep your skills and knowledge up to date with trainings, research, and analysis.

• You have a dedicated office space for the trading activity and have the required applications on a portable device to continue the activity when abroad.

Consequently, your income is assessable as ordinary income under section 6-5 of the ITAA 1997, while your losses are deductable under section 8-1 of the ITAA 1997.

This ruling applies for the following periods:

Period Ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You provided specifics on when you commenced trading, and the value of funds deposited.

You did not borrow any funds or draw on any credits for amounts deposited.

You commenced trading in cryptocurrency as you saw potential for substantial returns and diversification and the potential for a more flexible lifestyle.

You had no prior professional or personal investing or trading experience, however educated yourself 3 months prior to commencement on a variety of solid cryptocurrency projects and on different trading techniques.

You spend a specified number of hours per week further educating yourself on the market.

You provided us names of professional traders that you follow for advice and information.

You provided details on what records were kept.

You consider yourself a short-term swing trader holding trades ranging from a few days to several months.

You provided a detailed outline of your trading strategy and what strategy you use to limit losses and preserve your capital.

You provided the names of the platforms used to trade.

You provided transaction reports for each relevant financial year.

You provided specifics of withdrawals from the exchange.

You provided the figure you are currently trading with.

You spend a minimum specified number of hours per day researching and watching the market waiting for an optimal entry point. You engaged with local and international seasoned traders, completed a beginner's course, watched tutorials on YouTube and read blogs and forums to further your knowledge.

You provided trading stock reports for each relevant financial year showing total loss/profit.

You have a dedicated office space in your home and have an app on your portable device so you can trade abroad.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 6-10

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1997 section 70-80

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