Home Forums Personal Tax & Transfer Personal Is the transfer of cryptocurrency assets between exchanges a CGT event?

Viewing 2 reply threads
  • Author
    Posts
    • #1853
      John
      Participant

      Is the transfer of a crypto asset from one exchange to another, or from an exchange to a wallet the taxpayer actually owns (i.e. controls the private key) a CGT event?

      Instinct says “no” because the before and after look basically the same, however the sticking points for me are:

      • does the taxpayer have ownership of the asset on an exchange? Is there a blanket treatment here regardless of exchange terms?
      • each crypto asset has a unique address, like a serial number. Swapping one unique item for a different unique item is going to be a CGT event. I wonder how the ATO views this.

      Appreciate hearing people’s opinions on this. Would be really great if anyone has seen an ATO review on the topic

      Report as inappropriate
    • #1856
      TimothyCooper
      Participant

      Hi John,

      Technically speaking it would be disposal A1 if it is disposing one unique asset for another. Where there is an exchange between cryptos (i.e. trading one coin for a different coin) it is certainly reportable for CGT.

      In my mind I liken exchanges to share registries. While both ‘hold’ the asset, the beneficial interest lies with the owner, not the registry or exchange.

      Considering current rollover guidelines (which were drafted and do not currently consider cryptocurrency), where an individual exchanges for example shares in the same company or units in the same trust they can apply a rollover. It may be practically and reasonably arguable that this would apply to crypto as a CGT asset noting that in the example I’ve just given those shares / units would also be unique (akin to the unique coin scenario).

      I haven’t seen any ATO examples or reviews on this matter yet. Hope this helps.

      Report as inappropriate
    • #1857
      John
      Participant

      Hi @TimothyCooper,

      Thanks for the reply! I agree the ownership question is fairly easily put to bed, at least in generic situations.

      I like your rollover idea. While not explicitly included in the legislation, I think crypto assets do align with the general intentions of  Section 124: http://classic.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s124.240.html

      It would be interesting to see the outcome of a Private Ruling on the question (I wish I had the time!)

       

      Cheers,

      John

      Report as inappropriate
Viewing 2 reply threads
  • You must be logged in to reply to this topic.