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Edited version of your written advice
Authorisation Number: 7910122969382
Date of advice: 24 April 2018
Ruling
Subject: Currency – Capital Gains
Question
Are Capital profits or losses on the disposal of specific currency coins or specific currency tokens during the 2018 year taken into account to calculate your assessable income?
Answer
Yes
This ruling applies for the following period(s)
Year ending 30 June 2018
The scheme commences on
1 July 2017
Relevant facts and circumstances
You have acquired various currency coins and tokens as an investment since late 2017.
You will dispose of some of your specific currency investments before 30 June 2018 for a profit.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1997 section 104-10(1)
Income Tax Assessment Act 1997 section 108-5(1)
Income Tax Assessment Act 1997 section 108-5(1)(a)
Income Tax Assessment Act 1997 section 108-5(1)(b)
Income Tax Assessment Act 1997 section 108-20(1)
Income Tax Assessment Act 1997 section 108-20(2)(a)
Income Tax Assessment Act 1997 section 108-25
Income Tax Assessment Act 1997 section 110-25(2)
Income Tax Assessment Act 1997 section 116-20(1)
Income Tax Assessment Act 1997 section 118-10
Income Tax Assessment Act 1997 section 118-10(3)
Income Tax Assessment Act 1997 section 118-20
Tax Administration Act 1953
Reasons for decision
Summary
You will be liable to pay CGT on capital gains made on specific currency coins or specific currency tokens that are disposed of during the 2018 year.
Detailed reasoning
You make a capital gain or loss as a result of a capital gains tax (CGT) event happening to a CGT asset. CGT assets include real estate acquired on or after 20 September 1985. CGT events are those transactions that occur to a CGT asset that result in you either making a capital gain or capital loss.
You make a capital gain if your capital proceeds from the disposal of a CGT asset are greater than the cost base for the purchase of that asset, for example, if you receive more for an asset than you paid for it. You make a capital loss if your reduced cost base for the purchase of that asset is greater than the capital proceeds resulting from the disposal of that asset, for example, if you receive less for an asset than you paid for it.
Capital gains tax is not a separate tax, it forms part of your assessable income and is taxed at your marginal tax rate.
Taxation Determination TD 2014/26 Income tax: is bitcoin a 'CGT asset' for the purposes of subsection 108-5(1) of the Income Tax Assessment Act 1997 (ITAA 1997)? (TD 2014/26) paragraph 1 states that Bitcoin is a CGT asset for the purposes of subsection 108-5(1) of the ITAA 1997. ATO guidance paper “Tax treatment of specific currency-currencies in Australia – specifically bitcoin” confirms that the tax treatment of bitcoin can be applied to other specific currency or digital currencies that have the same characteristics as bitcoin.
The disposal of specific currency tokens or specific currency coins will give rise to CGT event A1 under subsection 104-10(1) of the ITAA 1997. A disposal includes when a specific currency is traded or exchanged in return for another specific currency.
A capital gain arises where the capital proceeds exceed the cost base. A capital loss will arise when the capital proceeds are less than the cost base.
In your case you will dispose of CGT assets during the 2018 financial year therefore, you will need to declare any gains or losses made during the financial year.
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