{"id":1827,"date":"2018-05-02T17:05:22","date_gmt":"2018-05-02T07:05:22","guid":{"rendered":"https:\/\/cruzandco.com.au\/?p=1827"},"modified":"2018-05-02T12:00:57","modified_gmt":"2018-05-02T02:00:57","slug":"can-bitcoin-personal-use-asset","status":"publish","type":"post","link":"https:\/\/cruzandco.com.au\/can-bitcoin-personal-use-asset\/","title":{"rendered":"Can Bitcoin Be a Personal Use Asset?"},"content":{"rendered":"
By Steve Burnham<\/strong><\/p>\n <\/a>A question was asked of the ATO recently, via its \u201cATO Community\u201d webpage (find out more about that\u00a0here<\/a>) that centred on the viability of deeming bitcoin (or any cryptocurrency) as a personal use asset.<\/p>\n The follow-up portions of the question of bitcoin as a personal use asset were as follows:<\/p>\n <\/p>\n The ATO answers If your client buys and uses bitcoin\u00a0solely<\/em>\u00a0to purchase goods and services for personal needs (such as clothing or music), the bitcoin will be a personal use asset.<\/p>\n Whether bitcoin is held solely for such purposes will always depend on a clients\u2019 particular facts and circumstances. The relevant time for working out whether or not their bitcoin is a personal use asset is at the time of its disposal.<\/p>\n As your client\u2019s tax practitioner, you\u2019ll need to consider the purpose for which the bitcoin was acquired and kept, and what the bitcoin is used for. It does not just depend on the nature of the assets that were purchased (when disposing of the bitcoin) because how the bitcoin is kept or used is also relevant, and it may change over time. For example, bitcoin may originally be acquired for personal use and enjoyment, but ultimately be kept or used as an investment, to make a profit or as part of a business. In such cases it will not be a personal use asset.<\/p>\n The basic rules are as follows:<\/p>\n Remember, if your client does make a capital gain from a cryptocurrency that is a personal use asset, the capital gain is only disregarded if the cost they incurred to acquire the bitcoin is $10,000 or less.<\/p>\n If capital gains tax does apply (that is, the cost incurred to acquire the bitcoin that is a personal use asset is more than $10,000), it isn\u2019t treated as a separate tax \u2014 your client will be required to report any capital gain in their tax return, where it will be added to their assessable income and may increase the amount of tax they will be required to pay.<\/p>\n Because tax isn\u2019t withheld from salary and wages to cover capital gains, your client may want you to work out how much tax they may ultimately owe so they have a chance to set aside sufficient funds to cover the amount.<\/p>\n\n
\n<\/strong>Two ATO officers compiled the following pointers.<\/p>\n\n