In most instances, spending crypto is taxed in Australia - so you'll pay Capital Gains Tax on any profit you've made from your crypto rising in price. However, there is one exception to this - the personal use asset rule. Find out about how the personal use asset rule works with crypto.
Personal use assets are capital assets that you keep for personal use or enjoyment. This could be crypto, furniture, household items, and more. The ATO has a full list of personal use assets in its guidance.
Capital gains and losses on personal use assets are exempt.
When it comes to crypto, your crypto may be viewed as a personal use asset if it is kept or used predominantly to purchase items for personal use or consumption.
Yes. Crypto may be considered a personal use asset, but there are very particular conditions for this. For example, cryptocurrency may be viewed as a personal use asset in the following situations:
When the crypto is acquired and held for some time before any such transactions are made, or if only a small portion of the crypto is used to make some transactions, it's unlikely that the crypto is a personal use asset (instead it may be viewed as an investment). A cryptocurrency is unlikely to be a personal use asset in the following situations:
The time of disposal of the crypto is the key to working out if it's a personal use asset. The longer the crypto is held, the more unlikely it is to be considered a personal use asset — even if you ultimately use it to purchase items for personal consumption. This is because you have likely used crypto as an investment.
So use this provision with care. If you end up getting investigated by the ATO, the burden of proof is on you to show that the crypto was, in fact, a personal use asset. Also, all capital losses you make on personal use assets cannot be written off against capital gains at any point.
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