If you are interested in cutting down your taxes on cryptocurrencies, you may know the proper strategy to avoid capital gains tax on cryptocurrency. And this is the reason today we mentioned here how to cut down taxes on cryptocurrencies.
Nowadays, cryptocurrencies are just like hot cakes in the financial sector. Almost everyone knows about it and has a clear idea too. Cryptocurrency is known as property for national income tax purposes. In simple words, cryptocurrencies are no different than any other sector that comes under income tax.
Today in this article, we will try to make you understand how to avoid crypto tax. So keep your eyes on these below-mentioned words and make yourself comfortable understanding these cutting down your income tax processes.
- There will be various capital gain rates depending on your time of owning cryptocurrencies. If you wish to get a lower income tax bill on your cryptocurrencies, then you must hold your crypto for a long time so that your short-term can convert into long-term ownership. Though people may think that it is not that easy, this can be done with patience.
- Another thing is to offset capital gains with capital losses. Though in this strategy, you may experience limits. If you can identify investment losses, you should offset losses, which should be of the same kinds.
- If you are thinking of converting your short-time ownership to long-term ownership, you can go for another strategy within this. That is selling in a low-income year. This process is quite good because it goes well with both short-term and long-term ownership.
- This fourth option is also a perfect strategy for lowering the tax. That is reducing the taxable income. That signifies hunting through the tax code for tax-lowering and credits that can lay your taxable income lower.
- Based on your aims to use your wealth, you may think about another way of reducing your crypto tax amount; and that process is gifting your cryptocurrency to family members.
- Another best option is donating your appreciated crypto to charity works. This will not just result in no capital gains tax, but also you can claim a considerable amount of tax deduction too on your tax return. But for doing this, you must hold your assets for a minimum of one year before donating this to charity work. It will result in a favorable income tax. If you do not know details about it, you can always take help from a professional tax adviser.
- You can do another thing which is declaring your crypto as your income. Suppose you are gaining the crypto in return for goods or services; in that case, the taxation will be different.
The Bottom Line
If you want to reduce your cryptocurrency tax, you can go for these strategies. You need to create proper tax planning. Some may think that this whole process of cryptocurrency taxation is complex, but this tax implication will change the future of the monetary situation of the nation.
The Australian Tax Office has recently announced that all cryptos are now subject to goods and services tax (GST) in Australia.
If you’re an Australian crypto trader, then it's imperative to keep track of your transactions and how they'll affect taxes.
Simply put: if you sold some Bitcoin abroad or made a purchase in Australia that wasn't with AUD, the ATO will want their share!If you’re trading cryptocurrency in Australia, then there may be other tax considerations that you need to know about.
