Bitcoin and tax

Bitcoin – have you heard of it?  If not, you soon will!  Bitcoin is becoming a very popular investment option.  Some people are making extraordinary profits, buying and selling the currency.  A lot are doing so without realising that a portion of that profit is payable in tax.

Bitcoin was released to the public in 2009.  Buying Bitcoin today is simpler than ever, with many established firms involved in the business of buying and selling.  The average person can now easily buy Bitcoin, with the intention of selling it at a profit.

Tax is payable on gains that you make on Bitcoin investments.  You may have heard that the currency is impossible to trace and so you’ll never get caught by the Australian Tax Office (ATO).  This is becoming less true as time goes by.

The ATO have put a whole Task Force in to Bitcoin investments and tracing gains and calculating tax and penalties payable on non-disclosed gains.  The larger the gain you make, the greater the risk that the ATO will track you down.  They will be wanting their share, plus interest and penalties.  Thes interest and penalties increase with the size of the tax payable and the length of time that has gone by since it was payable.

Australian Government Agencies now data match between each other, so they can identify people for further investigation or action.  This means that when you spend the profits from investments on property, cars and other luxuries, the ATO sees these purchases.  They may start asking questions if the amount you are declaring as income doesn’t line up with how much you are spending.

If you are investing in Bitcoin, make sure you understand that tax is payable on the profits and the risk of non disclosure of any gains.  If you are contacted by the ATO, it is helpful if you understand why they are asking these questions and how important it is that you provide accurate information.

Kirra Consulting can provide advice and assistance in tracking, managing and correctly disclosing your Bitcoin profits and liaising with the ATO on your behalf.  Let Kirra Consulting ensure you are not one of the names we see in the paper for tax evasion, because you simply didn’t understand that tax was payable on profits from Bitcoin investments.