Did you surprise someone with Bitcoin under the tree this year? Or maybe your Secret Santa gifted you some Crypto instead of the usual bath set?
Gifting and receiving cryptocurrency is one of the most innovative holiday trends to emerge in recent years. It’s practical, modern, and packed with potential.
But it’s also surrounded by questions: What happens to your taxes? Is this even legal?
If you’ve jumped on this trend, let’s take a closer look at what it means for your finances.
What the ATO Says About Gifting Crypto
When it comes to taxes, crypto isn’t treated like regular money in Australia. The Australian Taxation Office (ATO) classifies cryptocurrency as property, which means gifting it comes with some important tax rules.
If You’re the Giver
Gifting crypto in Australia isn’t as simple as clicking “transfer.” When you give crypto, it’s considered a disposal of an asset, triggering a Capital Gains Tax (CGT) event. Yes, even though you’re giving it away for free, the ATO wants to know if you’ve made a profit.
Here’s how it works:
- Calculate the fair market value of the crypto on the day you gifted it.
- Compare this value to the amount you paid for the crypto (your cost base).
- If the value has gone up, you’ve made a capital gain and will need to report it on your tax return.
For example, if you bought Bitcoin for AUD 10,000 and it’s worth AUD 15,000 when you gift it, you’ve made an AUD 5,000 gain. That’s great news for your investment record but not-so-great news for your tax bill.
If You’re the Receiver
Now, let’s flip the script.
If you’re lucky enough to receive crypto as a gift, there’s no immediate tax burden. Hooray! However, you’ll need to keep records of the crypto’s fair market value on the day you receive it.
This value becomes your cost base for when you eventually sell, spend, or trade the crypto. At that point, any profits will be subject to CGT.
Donating Crypto: Tax-Friendly or Tax-Tricky?
Now, let’s talk about the charitable side of crypto. Donating cryptocurrency can be a powerful way to make a difference, but here’s what you should know:
Tax Deductibility: If you donate crypto to an organisation with Deductible Gift Recipient (DGR) status, you may claim a tax deduction. However, not all organisations are set up to accept crypto, so do your homework.
CGT Exemptions: Donations to DGRs are exempt from CGT. This means you don’t need to report a gain or loss on the donation. However, you still need to document the crypto’s value at the time of donation.
Record Keeping: Keep detailed records, including the date of the donation, the type of crypto, and its market value. These are essential for both your tax return and your peace of mind.
Is Crypto Gifting Worth It?
Absolutely—if you do it right. Here’s why:
It’s Future-Oriented: Instead of a gift card or cash, crypto can grow in value, potentially turning your gift into something far more valuable.
It’s Unique: Let’s face it—crypto is still a head-turner. Gifting it shows you’re in touch with the times.
It’s Versatile: The recipient can choose to hold, trade, or even spend their crypto, giving them more control over how they use your gift.
That said, there are a few pitfalls to avoid:
Tax Complications: Forgetting to account for CGT could lead to penalties.
Recipient Readiness: Is the person you’re gifting crypto to ready to handle it? Not everyone knows how to manage a wallet or trade assets.
Tips for Crypto Gifting in Australia
Want to get it right? Here are some tips to make sure your crypto gifting experience is smooth and tax-compliant:
- Only gift crypto to people who understand how to handle it—or be ready to teach them.
- Note down the date, type, and market value of the crypto you’re gifting or donating. These records are essential for your tax return.
- If you’re donating, check that the recipient organisation is a registered DGR. You can confirm this through the ATO’s ABN Lookup tool.
- Crypto tax laws are evolving. Regularly check the ATO’s guidelines to ensure you’re compliant.
Wrapping Up: Crypto Gifting Done Right
So, did you gift or receive crypto this holiday season? If not, maybe it’s time to consider jumping on the trend. Gifting or donating cryptocurrency is an exciting way to embrace the future of money and add a personal touch to your generosity.
But remember, with great power (and great blockchain) comes great responsibility. Stay informed, keep detailed records, and always consider the tax implications. Done right, crypto gifting can be the gift that keeps on giving—both for the recipient and for you.
Next year, skip the predictable presents and give a gift that’s modern, meaningful, and maybe even a little profitable. Because let’s face it—nothing says “I care about your future” quite like a piece of the blockchain.
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