Category: Newsletters

Property Development – Deed of Partition and Transfers (NSW)

Property ownership is a major asset and when one or more people jointly own land or real estate from the time of purchase, when the time comes to transfer jointly owned, existing land or real estate between its co-owners, it will be necessary for the co-owners to fulfil their financial obligations of property partition.

Chapter 2 of the Duties Act 1997 (NSW) holds that duty is imposed on dutiable transactions of dutiable property. Section 30 (1) and (2) provide for partition – that is, transfer of ownership – between co-owners and for it being a single dutiable transaction. Stamp duty is charged on any single dutiable transaction of dutiable property.

Now, whether two or more people own land as joint tenants – each party owns the whole of the land together, or as tenants in common – each party owns a certain proportion of the land, partitioning is a process of transferring the land between those parties.

A Deed of Partition and Transfers will be drawn up to dissolve the joint ownership of a property, so that each person becomes the sole owner of one portion with its own land title.

By using a Deed of Partition and Transfers, it may be possible to avoid paying ad valorem stamp duty on the full value of the transfer of property (as is usual after a single entity purchases a property or properties for itself). In fact, a Deed of Partition and Transfers, when correctly prepared, results in nominal stamp duty of $50 (NSW) being payable upon the partition and transfer of NSW property between its co-owners.

Although the primary benefit of this deed is the occurrence of a nominal stamp duty charge, there are other benefits for each party. Benefits include clarity of the ownership split between parties named in a deed and a written understanding of expectations and agreements. Another attractive benefit of a Deed of Partition and Transfers is that the information contained therein may also mitigate quarrels from misunderstandings in future transactions.

Upon the creation of A Deed of Partition and Transfers, parties will need to present documentation including but not limited to:

There are other accounting and tax implications that must also be considered. Should additional levies be charged or Capital Gains Tax (CGT), GST or income tax be deemed and/or imposed, it is imperative that co-owners of land and joint property developers seek professional advice prior to partitioning.

How can YML help?

Get in touch with our YML Legal team to see how we can help with your Deed of Partition and Transfers. For more information, view our website and contact us on (02) 8383 4400. You can also reach us via email at legal@ymlgroup.com.au or by using our Contact Us page on our website.

Is your lender charging your SMSF a KILLER interest rate?



If you own residential or commercial property in your SMSF portfolio, you need to consider refinancing your SMSF loan this year while interest rates are low – starting at 3.94% per annum. If you are currently being charged around 5.5% - 6.5% per year, that could mean a big saving to your SMSF.

How can YML help?

Talk to our YML Finance Team today to see how YML Group can assist you with refinancing your SMSF loan. For more for more information, view our website and contact us on (02) 8383 4466 or by using our Contact Us page on our website.

Superannuation Increases – Trust Members + Contribution Caps + Guarantee Contribution Base + Pension Caps – from 1 July 2021



SMSF Membership

From 1 July 2021, allowable members in a SMSF will increase from a maximum of four (4) to a maximum of six (6), due to a recent amendment to the Superannuation Industry (Supervision) Act passed by Parliament in June 2021.

This change to the number of members a trustee may unite to form a SMSF will benefit larger families and could provide greater investment choice and investment flexibility. The more members in a SMSF, so too possibly reduce fees paid by its members.

Superannuation Contribution Caps

New legislation has reset Australia’s superannuation contribution caps for the first time since July 2017.

Using the Average Weekly Ordinary Time Earnings (AWOTE) index, the index figure of $1,711.60 at the end of the December quarter 2020 has (finally) triggered the $2,500 increment index. Therefore, from 1 July 2021 the new cap for concessional contributions will rise from $25,000 for all ages to $27,500 for all ages.

Concessional contributions include employer contributions and salary sacrifice contributions, as well as personal contributions claimed as a tax deduction. This new cap means that $27,500 of your concessional contributions will be tax-deductible.

In addition, from 1 July 2021 the new cap for non-concessional contributions will increase from $100,000 to $110,000.

Non-concessional contributions are your after-tax income contributions and are not taxed in your superannuation fund.

The non-concessional contribution cap, set at four times the concessional contribution cap, is $100,000 for 2021-22 OR $330,000 under the bring-forward rule over three years and subject to eligibility requirements.

Parliament has recently passed a Bill enabling individuals aged 65 years and 66 years to access the non-concessional contribution bring-forward rule from 1 July 2021.

The bring-forward rule allows under-66s to contribute up to three years’ worth of after-tax (non-concessional) contributions in a single year. If your total superannuation balance is less than the non-concessional threshold and you are deemed an under-66, then you may use the bring-forward rule.

Superannuation Guarantee

Whilst the current Superannuation Guarantee (SG) rate is already legislated to increase from 9.5% to 10% from 1 July 2021, the ‘maximum contribution base’ will rise from $57,090 per quarter in 2020-21 to $58,920 per quarter for 2021-22. The new quarterly maximum represents a per-annum equivalent of $235,680 for 2021-22.

An employer is not required to provide the minimum SG support for that part of an employee’s Ordinary Time Earnings (OTE) above the quarterly maximum contribution base of $58,920 in 2021-22.

Pension Transfer Balance Cap

‘Pension transfer balance cap’ refers to the maximum lifetime contribution in to a retirement-phase pension and from 1 July 2021 the general transfer balance cap will increase from $1.6 million to $1.7 million. This is based on the All Groups CPI index.

Once this increase occurs, from 1 July 2021 every individual person will have their own personal transfer balance cap of between $1.6 million and $1.7 million, dependent upon their own financial circumstances.

Also, the threshold for making non-concessional contributions will increase from $1.6 million to $1.7 million from 2021-22, thus individuals who on 30 June 2021 have a total superannuation balance of $1.7 million or more will not be eligible for the bring-forward provision.

Consult YML Group to help you determine your contribution amounts and limits within the new superannuation legislation in effect from 1 July 2021. If you are an employer, YML Group has the expertise to help you manage the SG changes from 1 July 2021.

How can YML help?

Talk to our YML Super Solutions Team today to see how YML Group can assist you with your superannuation opportunities. For more information, view our website and contact us on (02) 8383 4444 or by using our Contact Us page on our website.

Is it time you outsourced your business processes with YML?



Manila in The Philippines is a modern, technological hub for administrative and other services. Business Process Outsourcing (BPO) is how YML can help your company to run more efficiently 24/7. Why not give your company a boost with our very own YML Group Outsource Manila?

BPO is a valuable tool for Australian businesses. It enables an organisation to develop and utilise virtual, offshore working relationships. BPO can provide many advantages to your organisation’s onshore employees. You will be able to redistribute your onshore workforce and to refocus your internal resources to implement a more robust business strategy.

Some of the benefits of making practical and effective use of offshore BPO staff include:


YML Group Outsource Manila manages your remote staffing needs. Your business processes can be fulfilled by specially selected BPO staff who will be dedicated, professional and industry-specific to meet your organisation’s needs. YML will hire suitable people and provide them with a safe and secure working environment in YML’s offshore office in Manila in The Philippines.

We have BPO staff with the expertise and knowledge to fulfill all business processes including but not limited to:


You will be able to work directly with your remote staff in your time zone, developing protocols for effective communication via software tools and other technical channels with equivalent onshore employees.

YML is a leader in the field of BPO and we have helped many clients – individuals and SME companies – to build more productive businesses with the practice of outsourcing their business processes. Empower your company with BPO through YML Group Outsource Manila and see how cost-effectively you can invigorate your business growth.

How can YML help?

Talk to our YML Business Services Team today to see how YML Group can assist you with your BPO options. For more for more information, view our website and contact us on (02) 8383 4455 or by using our Contact Us page on our website.

Car Loans – In your Business or Personal Name?



Whether you put a car in your business or personal name depends on what percentage of vehicle use is business or personal. The more often a vehicle will be used for business, the more likely this will be the best name on the car registration. Or, if you only occasionally use a vehicle for business, then it might be financially prudent to put a car in your personal name.

Personal Name

Bought personally and used for business, you will be able to claim the business portion of vehicle use via your tax return or be reimbursed by your company. To claim the business portion, you must record your vehicle use in a logbook or use the cents-per-kilometre deduction method.

The logbook method can deliver a good tax outcome, so long as you maintain a logbook for a minimum of 12 weeks. Record trip date, starting and finishing odometer readings, total kilometres travelled and the purpose of a trip. Usually, you will only need to do this once every five years. You could consider an app for your phone to make it easier for you on-the-go.

Alternatively, you could claim in your tax return up to 5,000 kilometres by calculating the number of kilometres you travelled doing business and multiply this figure by $0.72 (ATO Mileage Rate for FY21).

For example, 4,171 kms x 0.72 = $3,003.12 added to your tax deductions in your tax return.

Business Name

If a vehicle is used entirely or almost exclusively for business, then having put a car in your business name, all operating costs are claimable including but not limited to registration, insurance, servicing, repairing and car washing.

However, any private use of the vehicle will require a record to avoid Fringe Benefits Tax (FBT). If a logbook is not created, then the deemed private use amount of a vehicle will be equal to 20 per cent of the full purchase price of the vehicle.

Generally, when a vehicle’s deemed private use amount is greater than any total deductible costs, it would best not to be in a business name. Before purchasing, you might well consider the price of any company-bought vehicle and its intended percentage of business versus private use.

When you need a car loan, YML Finance can run these calculations for you.

How can YML help?

Talk to our YML Finance Team today to see how YML Group can assist you with your car loan. For more for more information, view our website and contact us on (02) 8383 4466 or by using our Contact Us page on our website.

Australian Taxes Payable as a Foreign Resident



Australian taxes are paid by all Australian residents, including those who work and live temporarily outside of Australia. Known as foreign residents, these foreign resident Australians must consider their incomes and assets, including land holdings, when preparing their annual tax returns for the Australian Taxation Office (ATO).

As a foreign resident for taxation purposes, you must declare income earned in Australia from employment, rental property, as well as any pensions and capital gains made on Australian assets.

As a foreign resident you will not need to declare any interest, dividends and royalties you acquire from your Australian assets, so long as the Australian source, company or organisation, has accurately and properly withheld tax on your behalf. Importantly, updating the ATO and all Australian companies and financial institutions with whom you have assets will ensure that tax deductions are calculated correctly and timely applied.

There are some aspects of Australia’s taxation laws that affect only foreign residents, including no tax-free threshold on income earned, no Medicare levy payment for the days worked and lived overseas, and capital gains implications and land tax surcharges, all determined upon your individual financial circumstances.

Capital Gains Tax (CGT) – Property*

If you sell a residential property or land located in Australia whilst you work and live overseas, you will be liable to pay capital gains tax (CGT) on the difference between the purchase and sale prices. When a foreign resident sells a property, you must pay CGT unless a variation application is approved that could reduce the CGT to nil. Does this variation apply to you?

The ATO states that the sale of a property after 1 July 2020 will no longer be exempt from CGT unless specified life events occur “within a continuous period of six years of [an] individual becoming a foreign resident”. These life events include a foreign resident, their spouse or their child having a terminal medical condition or dying or a foreign resident divorces or their relationship formally ends.

Land Tax Surcharge NSW – Property*

A land tax surcharge is payable in NSW by foreign residents who own residential property or land located in NSW. This land tax surcharge is payable in addition to any land tax generally levied upon NSW residential property. Is this surcharge applicable to your NSW property ownership?

All NSW residential property owned on 31 December each year is subject to payment of a surcharge on the taxable value of the land and foreign residents must pay a land tax surcharge of 0.75 per cent of the taxable value of their land, regardless of whether their property is exempt from general land tax.

*Our professional accountants at YML Group have expertise in taxation laws and regulations to help you assess and determine what taxes pertain to your income and property in Australia and NSW whilst you are a foreign resident.

How can YML help?

Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with foreign resident taxation. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.

Australia’s Federal Budget 2021-22 – What’s new and what’s in it for you?

The Australian Government’s 2021-22 Federal Budget is based on numerous assumptions: a vaccinated Australian population, state borders remaining open, mitigation of COVID-19 outbreaks and a restrained, calculated reopening of Australia’s international border.

Treasurer Josh Frydenberg stated in Parliament last night, “Mr Speaker, this pandemic is not over”. The Government’s priority is to keep Australia and its inhabitants safe from COVID-19, thus the Treasurer began early with the announcement of an injection of $1.9 billion for the vaccine rollout and $1.5 billion for COVID-19-related health costs.

Generally, the Budget extends many existing schemes and policies, expanding some with additional funds to create further stimulus and maintain momentum of Australia’s economic recovery. Job recovery support, training support and tax relief are key areas of focus for the Government and these, along with Australia’s financial status and this Budge’s incentives for Australians, are explained.

Australia’s Economy

Australia’s Treasurer, Josh Frydenberg, has revealed a lower-than-expected deficit of $161 billion in 2020-21, revised down by $52.7 billion. He announced a deficit fall to $57 billion by 2024-25. Australia’s deficit remains a ‘structural’ one for the foreseeable future.

Australia’s gross debt is expected to be 40.2% of GDP ($829 billion) this year and then stabilise at around 51% of GDP in the medium term, whilst Australia’s net debt will increase to 30% of GDP ($617.5 billion) this year and then peak at nearly 41% of GDP in 2024-25.

Although debt levels are high, the Treasurer spoke of the economy rebounding effectively from the depths of last year’s pandemic-related ‘recession’.

Unemployment remains above 5 per cent this year but is lower than the previously predicted 8 per cent or more. By 2022-23 unemployment is anticipated to be at a rate of 4.75 per cent.

International Borders

The Government will begin a measured approach to reopening Australia’s international border by mid-2022 with limited and gradual inbound and outbound flows.

TAXATION – BUSINESS

Extension – Capital Asset Investment Deductions & Carry-back Company Losses

The Treasurer announced the extension of two business tax incentives to help businesses that invest in their future. These two schemes will lift productivity and employment, leading to a boost in GDP, over the short to medium term and together they will deliver an additional $20.7 billion in tax relief over the next three to four years.

Under the Capital Asset Investment Deductions Scheme, businesses with less than $5 billion in turnover who invest in their future, may fully expense new depreciable assets – uncapped purchase cost – and the cost of improvements to existing eligible assets in the first year of use – acquisition of eligible capital assets from 7:30pm AEDT on 6 October 2020 and first used or installed by 30 June 2023.

The full expensing of capital asset investment will generate tax losses for some companies. Therefore, for eligible companies with less than $5 billion in turnover, losses may be applied against taxed profits in a previous year, thereby generating a refundable tax offset in the year in which a loss is made. The Carry-back Company Losses Scheme has been extended for another year to include losses up until 30 June 2023.

NEW – Tax Incentives for Innovation

To encourage investment in Australian medical and biotech technologies, on 1 July 2022 the Government will introduce a ‘patent box’ – to keep patents in Australia – that will reduce taxes – to a 17% concessional rate – on income from innovative research undertaken in Australia. This incentive complements the previously announced (Budget 2020-21) Research and Development Tax Incentive (due to be reviewed by the end of 2021).

To encourage Australia’s digital games industry and foster its growth, the Government will introduce a 30 per cent refundable tax offset – capped at $20 million a year – to digital game developers for eligible Australian games expenditure.

TAXATION – INDIVIDUALS

Extension – LMITO

The Treasurer announced an injection of $7.8 billion to continue the tax cuts for 10.2 million low- to middle-income earners. This extension of the LMITO (Low and Middle Income Tax Offset) will mean a tax reduction of up to a maximum of $1,080 for individuals with a taxable income of between $48,000 and $90,000 during the 2021-22 financial year. Couples will receive a tax reduction of up to a maximum of $2,160.

  Taxable Income Amount   LMITO
  $37,000 or less   $255
  > $37,000 but < $48,000   $255 plus 7.5% of the amount > $37,000
  > $48,000 but < $90,000   $1,080
  > $90,000 but < $126,000   $1,080 minus 3% of the amount > $90,000


This table shows Current Tax Thresholds for Individuals in Australia:

  Tax Thresholds
  Tax Rate   Current   From 1 July 2020
  0%   $0 - $18,200   $0 - $18,200
  19%   $18,201 - $37,000   $18,201 - $45,000
  32.5%   $37,001 - $90,000   $45,001 - $120,000
  37%   $90,001 - $180,000   $120,001 - $180,000
  45%   >$180,000   >$180,000
  LITO   Up to $445   Up to $700


INCENTIVES FOR SENIORS

Superannuation

From 1 July 2021 Australians over the age of 60 years – previously 65 years – will be able to make a one-off, post-tax contribution to their superannuation fund. This contribution may be up to $300,000 for one person or up to $600,000 for a couple and may be made only upon the sale of their home.

The purpose of this new policy is to encourage older Australians to “consider downsizing… freeing up the stock of larger homes for younger families” (Treasurer Josh Frydenberg).

Pension Loan Scheme

For those retirees not wanting to sell their home and downsize but who do want to improve their retirement income, the Pension Loan Scheme has been changed in this Budget to enable lump-sum cash payments from superannuation funds to eligible retirees.

By borrowing against their homes, retirees can receive a cash lump sum up to $12,385 for singles and up to $18,670 for couples with the loan payable upon the eventual sale of their homes.

The Government intends to encourage uptake of this scheme by spending $21.2 million, partly on targeted communication.

UNDERWRITING HOME OWNERSHIP

Extensions – Home Ownership Schemes

A temporary extension and expansion of the First Home Loan Deposit Scheme will see an additional 10,000 New Home Guarantees in 2021-22, available from 1 July 2021 and enabling eligible buyers to purchase a home for a minimum of 5% deposit without mortgage insurance.

The First Home Super Saver Scheme has also been expanded to enable eligible first home buyers to access up to $50,000 – an increase from $30,000 – of their tax-free superannuation contributions to boost their deposits.

NEW – Home Ownership Scheme

The Australian Government’s new Family Home Guarantee Scheme will provide financial assistance in the form of a deposit guarantee to a select 10,000 new home buyers over four years – specifically, eligible single parents with dependent children – of 18% of the purchase price of a home, leaving the home buyer to purchase a home with a 2% deposit.

JOBS AND TRAINING

Extension – JobTrainer and Boosting Apprenticeship Commencements

To help the economy prosper post-COVID-19, JobTrainer, the Government’s investment in skills of young people and job seekers, providing 450,000 free and low-fee training places (in fields of skills shortages such as digital and aged care), has been extended until 31 December 2022. It has also been expanded by an additional $500 million commitment from the Federal Government – to be matched by state and territory governments, thus supporting hundreds of thousands of eligible people to enter the workforce.

An additional $2.7 billion will be allocated by the Government to extend the Boosting Apprenticeship Commencements program and support 170,000 apprenticeships and traineeships who commence by 31 March 2022. This commitment by the Government will see the continuation of a 50% wage subsidy available to eligible businesses that take on a new or recommencing Australian apprentice or trainee. This wage subsidy is capped at a maximum of $7,000 per quarter.

This year the Government has announced it will deliver policy to see services for 5,000 women to enter non-traditional apprenticeship.

FAMILIES

Childcare

To give parents, especially women, the opportunity to start a job or to undertake more work, a $1.7 billion investment in childcare will procure an average of $2,200 a year for families who have more than one child in childcare. Benefiting low- to middle-income families, this incentive is expected to deliver higher workforce involvement by parents.

For more info, visit Federal Budget 2021-22.

How can YML help?

We hope that this guide helps you to navigate the 2021-22 Federal Budget. Please talk to our Accountants today if you would like to engage YML Chartered Accountants to manage your ‘road to recovery’. Contact us on (02) 8383 4400 or by visiting the Contact Us page on our website.

When are Superannuation Pensions available to Younger People?



Superannuation pensions are usually for older, retired people who reach the legal age for access of their superannuation. There are, however, two younger groups of people for whom being paid a superannuation pension comes in to effect because of either a serious illness or accident or because of the death of a spouse.

In the first case, if you are badly injured in an accident and are permanently incapacitated or suffering from a terminal medical definition, then you can gain access to your own superannuation at an earlier age than retirement. A superannuation pension is therefore provided to you to help you deal with your new life situation.

In the second case, if your spouse dies under retirement age – and you, too, are under retirement age, then you may be entitled to access the superannuation of your deceased spouse. Your superannuation would remain locked up until retirement criteria is met by you, but your partner’s superannuation would be treated differently now that it is you – whatever your age – who would have access to it in the form of a pension.

There are challenges to your access of a deceased spouse’s retirement fund:

First, a superannuation pension uses up some or all of the surviving partner’s ‘transfer cap’, the maximum lifetime contribution in to a retirement phase pension. From 1 July 2021, the cap will increase from $1.6 million to $1.7 million.

So, if a life insurance payout is added to a superannuation balance, then the total superannuation balance could exceed the transfer balance cap for the surviving partner. Thus, the amount over $1.7 million (from 1 July 2021) would need to be paid out entirely to the estate, to the surviving partner or to another beneficiary.

In such an instance, the surviving partner’s own superannuation fund would have no transfer balance cap left and their fund would continue to accumulate until being paid out as a lump sum only.

Any death benefit pension means a tax exemption on some, or all, of its investment income may be claimed, just as with any retirement phase pension. It may be possible to sell assets or invest in assets that pay hefty incomes because there will be minimal or no tax implications either way.

Other tax considerations include the surviving partner’s own plans to make ‘non-concessional contributions’, for example, being disrupted. Depending upon the surviving partner’s superannuation balance at financial year end, non-concessional contributions might be nil, especially once the deceased spouse’s balance is taken in to account.

Finally, the pension payments to the surviving partner will be taxed at normal marginal rates unless the surviving partner and the deceased spouse were both over 60 years old at the time of the spouse’s death.

Should your spouse die, and you are both below retirement age, making plans for a superannuation pension from your deceased spouse’s fund and for your own ongoing fund is important to avoid any financial pitfalls. To determine the effect of tax on the surviving partner’s fund, it is best to seek expert financial advice.

How can YML help?

Talk to our YML Super Solutions Team today to see how YML Group can assist you with early access to a superannuation pension. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.

Small Business – Fees & Charges Rebate – Up to $1500



The impact of the COVID-19 pandemic continues to stunt the growth of many a small business. The NSW Government has devised a rebate to offer some financial relief to assist small business owners and sole traders to start or stay in business.

Eligible businesses can receive up to $1500 in rebates to offset the cost of specific NSW state and local government fees and charges incurred during the running of a business.

Who is eligible for the $1500 rebate?

Sole traders and small business owners who:
What can be claimed?

Whilst running a business, NSW state and local government fees and charges befall most small business owners and sole traders: costs such as council rates, outdoor seating fees, event fees, food authority and liquor licences and tradesperson licences.

Eligible applicants can lodge multiple claims – as these types of expenses arise and are paid – until the $1500 rebate cap is reached.

The NSW Government stipulates that for a fee or a charge to be eligible, it must be due and paid from 1 March 2021.

What cannot be claimed?

There are some costs that are excluded from the rebate and these are outlined as:
To see what fees and charges are included and excluded, please refer to https://mcusercontent.com/68ee476273ad93057985adb07/files/6e1f357e-e7a4-495c-8bb6-97c9daf09c65/eligible_fees_and_charges_small_business_rebate.pdf

Application Process

You only need to apply once via your MyServiceNSW account, uploading all relevant documentation to prove your eligibility. Thereafter, you may claim as many times as you need to reach the $1500 rebate cap.

You will need to keep a record of your invoices and receipts showing your payments for each of your claims.

This NSW Government rebate will be available until 30 June 2022 and YML Group’s experienced Accountants can help you determine your eligibility, record fee and charge payments and assist with your rebate and claim applications. To engage YML to manage the process for you, go to https://app.hellosign.com/s/C14bVnW3

How can YML help?

Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with NSW Government rebates. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.

Cryptocurrency – What are the Taxation Implications?



Money or fiat currency, legal tender issued by a government, is no longer the only ‘currency’ in the markets. Cryptocurrency, a digital asset using encryption to generate additional units and verify transactions, operates independently of a central bank or a government and, therefore, is subject to taxation when it is tendered, bought or sold.

What impact trading cryptocurrency will have on your annual income tax return will be determined by the ATO and this financial year, the ATO has its focus on cryptocurrency traders, so it is worthwhile understanding some important points about how the ATO handles cryptocurrency and taxation.

The cryptocurrency space is evolving and the ATO’s rules and laws may change. For now, here is a summary:

Cryptocurrency includes Bitcoin and other crypto- or digital currencies with similar characteristics to Bitcoin. The profit, calculated in Australian dollar (AUD) amounts, you make when you exchange cryptocurrency for fiat currency or spend cryptocurrency on goods and services may be deemed taxable by the ATO.

Taxable cryptocurrency profit is determined in different ways:

1. Income derived from trading cryptocurrency as a business or as a professional cryptocurrency trader: cryptocurrency profit may be treated as business or as personal income and therefore be subject to a relevant personal or business income tax.

If your business accepts cryptocurrency as payment for goods and services, then the value calculated in AUD must be declared as part of your business’s income.

If your business uses cryptocurrency to make purchases for your business, then the value calculated in AUD may be tax deductible, based on market value eligibility for any deduction.

If your business pays an employee using cryptocurrency, then a salary sacrifice would mean the payment is classed as a fringe benefit and taxation would be determined subject to the Fringe Benefits Tax Assessment Act 1986. Without a salary sacrifice arrangement, the payment would be classed as normal salary or wages and PAYG taxation on the value calculated in AUD would apply.

In short and in general, cryptocurrency profit made through business dealings will be assessed by the ATO and considered to be income where the activity (exchange) occurred in a business-like manner or with a commercial nature.

2. Personal gain where cryptocurrency resulted in a profit through personal investment: cryptocurrency profit from an investment classed as an asset or property may therefore be subject to capital gains tax (CGT).

If you have bought cryptocurrency for the purpose of an investment and you dispose of that investment in ways such as: Then, the disposition of your cryptocurrency, in ways such as these, that yields a capital gain could attract a CGT obligation.

If, however, you hold your cryptocurrency for more than 12 months before selling or trading it, you could be entitled to a 50% CGT discount when you dispose of any of or all your cryptocurrency holding.

Personal use of cryptocurrency, such as purchasing Bitcoin or a similar cryptocurrency for the purpose of buying an item or paying for a personal service online, is generally not regarded by the ATO as an investment, an asset or property. Be aware that the longer you hold cryptocurrency, the more likely it will be classed as an investment.

Make sure that you declare all your cryptocurrency transactions to the ATO, just in case there is a tax implication on a transaction.

Minimising your tax on cryptocurrency

Consider the following tips whilst remaining compliant with ATO rules and laws:

Hold your cryptocurrency for 12 months or longer, so that you might be eligible for a CGT discount.

Plan your intention for and use of cryptocurrency before buying and research the corresponding and applicable tax implications.

Maintain accurate records of your cryptocurrency transactions, so that you will be able to readily disclose your personal or business income and any profit gains or losses. Remember, cryptocurrency transactions are traceable.

Record-keeping includes noting: And holding on to: Stay ahead and keep on top of your tax obligations by consulting YML Group which has the expertise to help you maintain your cryptocurrency records and to work out the tax implications of your cryptocurrency transactions.

How can YML help?

Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with your cryptocurrency taxation. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.