Receiving your salary in bitcoin may sound attractive, but do you have to pay taxes in Australia? With the growth and performance of the cryptocurrency over the past few years, more and more people are starting to switch to getting their money through cryptocurrencies.
The rise of cryptocurrency payment companies is also helping to spread this trend, as people choose to get paid in bitcoin and other assets, while telecommuting is also pushing that choice.
Is this possible in Australia? This week we cover all taxes involved when receiving your paycheck in bitcoin or other cryptocurrency, including tax scenarios.
Can I get paid with bitcoin in Australia?
Yes, you can start receiving your salary in bitcoin or any other cryptocurrency as long as your employer has the ability to make the transaction and you both agree to it. Some companies can automatically exchange a percentage of your salary into BTC and send it directly to your wallet.
Do I have to pay taxes if I am paid in Bitcoin in Australia?
Yes, if you receive your salary in Bitcoin in Australia, you must pay income taxes, which are exactly the same tax obligation as receiving a regular salary in Australian dollars. To file your tax return, you need to record the fair market value (in Australian dollars) of the cryptocurrency you receive each month and declare it as ordinary income.
Let’s look at an example.
John earns $90,000 a year and wants to start getting paid in Bitcoin. Since the price of Bitcoin varies daily, John will receive a different amount of Bitcoin each month, but always the same fair market value (AUD 7500 per month).
John, who is interested in saving time and reducing complexity, creates a cool new wallet address and connects it to CoinTracking to receive his income. CoinTracking automatically records new deposits made to the address and calculates the FMV at the time it arrives.
At the end of the fiscal year, John can generate an income report using CoinTracking, and submit it as part of his tax return.
Subscribe to CoinTracking today!
How much do you get taxed on cryptocurrency?
Australia’s regular income tax rates apply if you receive your salary in bitcoin or any other cryptocurrency.
For 2022, the income tax rate for our example would be 32.5%, assuming this is the total taxable income (after deductions, etc.).
In this example, John would pay A$19,717 ($5,092 plus 32.5 cents for $1 on $45,000).
Do you pay tax on cryptocurrency earnings in Australia?
If you later sell Bitcoin or the cryptocurrency you received as salary in Australia at a profit, you will have to pay capital gains taxes on the difference between the amount declared as income and the proceeds from the sale.
Let’s imagine that John wanted to sell his first batch of bitcoins he got in January 2021. He got a bitcoin worth A$7,500. At the time, 1 bitcoin was worth 50 thousand Australian dollars. As a result, he earned 0.15 BTC in January 2021. In October 2021, John decided to sell 0.15 BTC since Bitcoin reached a new all-time high of A$67K.
John’s cost base on this trade is A$7,500 and his sale proceeds are A$10,050 (0.15 Bitcoin * A$67000). John will pay capital gains taxes on the difference between the sale proceeds and the cost base. In this case, John will pay capital gains taxes on a profit of A$2,550.
How do you report your bitcoin salary in relation to taxes in Australia?
Here’s how to report your Bitcoin paycheck to taxes:
Determine the fair market value (in Australian dollars) of all bitcoins that you have received as salary.
Add your total crypto income (all FMV files received).
Report your crypto income on your income tax return.
It’s easier to keep track of cryptocurrency salaries by importing them into a crypto tax software like CoinTracking, which automatically calculates all of your FMV files for you.
Learn how to import your Bitcoin salary into CoinTracking:
Australia’s Best Crypto Tax Calculator: CoinTracking
CoinTracking is the best crypto tax software for Australian investors, allowing trades to be imported from hundreds of exchanges, including DeFi/DEXes, Binance Smart Chain, MATIC, NFTs and more!
CoinTracking can then help you take care of all your crypto tax reporting requirements other than crypto salaries:
Over 25 advanced reports, including coins that offer you a tax-free rate.
automatic capital gains With 12 accounting methods (eg, FIFO, LIFO, HMRC, ACB).
Create complete and compatible tax reports.
Do you have any questions about crypto taxes? Check out Full Service Australia
Cryptocate, CoinTracking’s full-service Australian partner and leading Australian crypto tax firm, offers a range of services to help with cryptocurrency reporting. If you have received cryptocurrency as income, salary, airdrop, interest, etc., Cryptocate specializes in generating cryptocurrency income and capital gains reports to ensure your tax compliance. Talk to an expert from Cryptocate today by submitting a form on our full service page!
Clarify your questions other than taxes on Bitcoin salary:
Cryptocurrency Australia Tax: The Complete Guide
NFT Taxes Australia: The Complete Guide
Do you pay taxes to transfer cryptocurrency in Australia?
Australian Taxation and Cryptography Bureau
Do you pay taxes for receiving airdrops in Australia?
Find crypto tax accountants near me
The 85 Best Crypto Twitter Accounts To Follow
Top 12 Markets for NFT
Crypto Debit Cards: Top 5 Suppliers in 2021
Bitcoin Analysis: Here are the 7 Best Tools to Find It
Non-Foldable Tokens: A Beginner’s Guide to 2021
*This post is part of our education series on crypto taxes in Australia. The article was backed and reviewed by expert accountants from Cryptocate, Australia’s full CT service provider.
Disclaimer: All information provided above is for informational purposes only and should not be considered professional, legal or tax advice. You should do your own research or consult with a professional financial advisor when investing.