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Crypto losses | Online Tax 2024

May 27, 2024

Find out about Crypto Losses

If you're losing money on your Crypto trading, then this is what you need to know to get that tax return done.  Gotax also has an automatic Crypto page that does all the heavy lifting for you.  Just enter the numbers and Gotax completes your Tax return effortlessly.  Here's an overview of what Crypto Losses and your Income Tax is all about.

We'll start off with a Tax WARNING. 

The Tax Office DOES get your trading information. If you do not show your Crypto activities, the Tax Office will.  And they will apply penalties if you fail to declare any gains. 

You Can't Offset Crypto losses against Employement Income

Firstly, let’s understand why crypto losses can’t be offset against employment income. According to the Tax Office, crypto losses can only be offset against capital gains, not against income from other sources like your salary. This is because crypto losses and gains are fundamentally different from regular income and expenses.

What can you offset Crypto losses against?

So, what can crypto losses be offset against? The answer is capital gains. If you sell a cryptocurrency and make a profit, that’s a capital gain. If you sell at a loss, that’s a crypto (Capital) loss. You can use your crypto losses to reduce your capital gains, thereby reducing your overall tax liability.

Let’s look at some real-world Crypto taxation examples:

  1. You sell Bitcoin at a loss, but you also have gains from selling Ethereum. You can use the crypto loss from the Bitcoin to offset the capital gain from the Ethereum.
  2. You sell Ripple at a loss, but you have gains from selling Litecoin. Again, the crypto loss can be used to offset the capital gain.
  3. You sell Dogecoin at a loss, but you have gains from another cryptocurrency. The crypto loss from the Dogecoin can offset the gain from the other cryptocurrency.

A crypto loss crystallises when you dispose of a cryptocurrency for less than its buy value. This happens when you sell a cryptocurrency, like Bitcoin or Ethereum, for less than what you paid for it.

If you have losses in a year, these will be able to be carried forward to subsequent years until you are in a position to absorb them against a future Capital Gain.

Remember, managing crypto losses and gains can be complex. It’s always a good idea to use a trusted platform like gotax.com.au to complete your income tax return and Deduction Grabber to record your tax transactions. Stay informed, stay ahead!


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