How to Avoid the ATO’s Crypto Crackdown and Keep Your Profits

Cryptocurrency is all the rage these days, and you might be tempted to jump on the bandwagon and make some money from this digital gold rush. But before you do, you must know how the taxman treats your crypto gains and losses.

You see, cryptocurrency is not like regular money that you can spend or save without worrying about tax. It’s more like an asset, like shares or property, that can go up or down in value over time. And when you sell or use your crypto, you might have to pay capital gains tax on the difference between what you paid for it and what you got for it.

Sounds complicated? Don’t worry, we’re here to help. We are MDB Taxation and Business Advisors, a team of experienced accountants in Melbourne who specialise in cryptocurrency tax. We can help you understand how crypto tax works, how to calculate your capital gains or losses, and how to minimise your tax bill legally and ethically.

What is crypto tax and how does it work?

Crypto tax is based on the Australian capital gains tax system, which applies to any asset you sell or dispose of for more or less than what you paid. This includes trading or swapping your crypto for another currency, using it to buy goods or services, or even gifting it to someone else.

To work out your crypto tax, you need to do two things:

• First, you need to keep track of all your crypto transactions in Australian dollars (AUD), including the date, the amount, the price and any fees involved. This will help you determine your cost base (the amount you paid to acquire your crypto) and your sale price (the amount you received when you sold or used your crypto).
• Second, you need to subtract your cost base from your sale price for each transaction. This will give you either a capital gain (a profit) or a capital loss (a loss). If you have multiple transactions, you can add up all your gains and losses and get a net capital gain or loss for the year.

This net capital gain or loss is then added to your regular income and taxed at your marginal tax rate for that year. For example, if you made $10,000 from selling crypto and your income from other sources was $80,000, your total taxable income would be $90,000 and your tax rate would be 37%.

But here’s the good news: if you hold your crypto for more than 12 months before selling it, you can get a 50% discount on your capital gains tax. That means you only pay tax on half of your profit. For example, if you bought $10,000 of crypto and sold it for $25,000 after two years, your capital gain would be $15,000 but you would only pay tax on $7,500.

How to pay less tax on your crypto investments

As you can see, crypto tax can be quite complex and confusing. That’s why you need a professional accountant who knows the ins and outs of cryptocurrency tax and can help you maximise your deductions and minimise your liabilities.

At MDB Taxation and Business Advisors, we have helped many clients with their crypto tax issues and saved them thousands of dollars in the process. Here are some of the strategies we use to help our clients pay less tax on their crypto investments:

• We help them keep accurate and complete records of all their crypto transactions using software like Cryptotaxcalculator
• We help them calculate their cost base and sale price using the most favourable methods allowed by the ATO, such as FIFO (first in first out) or LIFO (last in first out).
• We help them claim all the expenses related to their crypto activities, such as fees, commissions, subscriptions and hardware costs.
• We help them offset their capital gains with their capital losses from other assets or previous years.
• We help them plan their crypto sales strategically to take advantage of the 12-month holding period discount and avoid triggering higher tax brackets.
• We help them structure their crypto investments in the most tax-efficient way possible, such as using trusts or self-managed super funds.
• Assist with working out if you are a Cryptotrader VS Cryptoinvestor with the positives and negatives of each

Why choose MDB Taxation and Business Advisors as your accountants in Melbourne?

If you are looking for accountants in Melbourne who can handle your cryptocurrency tax matters with expertise and professionalism, look no further than MDB Taxation and Business Advisors.

We are not just accountants; we are also avid crypto investors ourselves. We understand the challenges and opportunities that come with investing in this emerging and volatile market. We have been following the developments and trends in the crypto space for years and we are always up to date with the latest tax rules and regulations.

We are also passionate about helping our clients achieve their financial goals and grow their wealth through crypto investing. We don’t just crunch the numbers; we also provide personalised advice and guidance on how to optimise your crypto portfolio and maximise your returns.

We are more than just accountants; we are your trusted crypto partners.

How to get started with MDB Taxation and Business Advisors

If you are ready to take your crypto investing to the next level and pay less tax on your crypto gains, contact us today for a free consultation.

We will review your current situation, answer your questions, and provide a tailored quote for our services. We can also help you with other accounting and business needs, such as bookkeeping, financial reporting, business advisory, and more.

Don’t let crypto tax stress you out or hold you back. Let us handle it for you and save you time, money, and hassle.

Call us now on (03) 9349 1488 or email us at mdb@mdbco.com.au

We look forward to hearing from you and helping you with your crypto tax needs.