The complete bitcoin tax guide to paybtc

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last updated on

1
Dec
2023

What is paybtc

paybtc is an Australian based, swift and secure platform that facilitates the buying and selling of bitcoin round the clock. Its unique self-custody feature guarantees full ownership and control over investors' bitcoin.

  • Instant transactions: Payment for bitcoin purchase clears instantly upon receipt of AUD funds.
  • Quick sale transfer: The platform ensures funds from bitcoin sales clear to bank accounts swiftly after just 1 block confirmation.
  • Full ownership: With its self-custody feature, investors always maintain absolute control and ownership of their bitcoin.

Do you have to pay tax on bitcoin?

The first bitcoin tax guidelines from the ATO in 2014 clarified that bitcoin transactions are taxable.

In Australia, you're legally required to declare all your income, including what you earn or lose from bitcoin on paybtc.

ATO tax treatment of bitcoin

There are two types of assessable income that your paybtc investments are taxed on in Australia:

Capital Gains Tax (CGT): You’ll end up with capital gains whenever you purchase bitcoin, and later sell it for a higher price. Capital gains and losses can result from trades, disposals, gifts and many other transaction types.

Example: You buy Bitcoin on paybtc and later sell it, resulting in a Capital Gain that you must declare CGT on.

Ordinary Income: You can easily end up earning income from a number of sources such as commissions, referrals, rewards and many more. These sources of income must be declared on your income tax return.

Example: You generate interest on paybtc, resulting in Ordinary Income which must be declared.

Bitcoin taxes can be tricky. It's important to know what transaction records to keep and how to work out your taxes. This helps you avoid mistakes that could cause an ATO audit.

Penalties for not declaring tax

The ATO, funded by an annual $3.6 billion budget, administers our tax system in Australia. It has a dedicated Black Economy Taskforce to address the shadow economy including bitcoin. You'll end up facing severe penalties for not declaring, including fines, interest charges, and possibly criminal prosecution for tax evasion.

Investors on paybtc who skip declaring their bitcoin income are under tremendous risk. The good news is, Australia has one of the highest rates of tax adherence, with over 93.7% of taxpayers fulfilling their obligations, making those attempting to evade taxes a tiny minority.

Even being late to lodge your tax can be risky, putting you into bad standing with the ATO and the Australian Government, and increasing the likelihood of a review or audit. You’ll also find it much harder to get a loan or borrow for a home mortgage.

Does paybtc report transactions to the ATO?

paybtc is an Australian registered entity. As an Australian digital currency exchange, it's a legal requirement for paybtc to register with AUSTRAC, perform KYC and know the identity of their customers. This is important for preventing scammers and criminal activity.

Since 2019 the ATO has been operating a data sharing program with Australian Digital Currency Exchanges. Under the data sharing program, paybtc must provide transaction data of their users to the ATO.

In short, the ATO knows about your transaction history on paybtc.

You’ll know the ATO has your bitcoin transaction data, as it will show in the prefill report on your tax return. That means it's important that you do calculate and declare your crypto gains, otherwise it’s only a matter of time before you end up under audit by the ATO.ATO pre-fill report showing bitcoin

ATO record keeping requirements

To complete your bitcoin taxes each year, there’s some important records that you need to keep. Having these records will help you to calculate and declare your bitcoin tax, and are also your evidence if you need to prove how your bitcoin tax was calculated.

The ATO record keeping requirements for bitcoin require you to keep the following:

  • receipts when you buy, transfer or dispose of bitcoin assets
  • a record of the date of each transaction
  • a record of what the transaction is for and who the other party is (this can just be their bitcoin asset address)
  • exchange records
  • a record of the value of the bitcoin asset in Australian dollars at the time of each transaction
  • records of agent, accountant and legal costs
  • digital wallet records and keys
  • a record of software costs that relate to managing your tax affairs

The ATO has also advised that records should be kept for at least 5 years.

paybtc Account Statements

All reputable digital currency exchanges have account statements available to download, as they are required to ensure you can meet your record keeping requirements in Australia.

You can find your paybtc account statements by logging in to your account and searching for them.

You'll want to export a complete record of your:

  • deposits,
  • trades,
  • withdrawals,
  • and any other transactions.

If you're having trouble finding your account statements then reach out to paybtc support for assistance.

Having your records is just step one, because now you’ll need to calculate the tax outcomes for each and every transaction. You’ll need to make sure you do it accurately, or you’ll be at increased risk from the ATO.

How is bitcoin taxed on paybtc?

We all know that bitcoin is taxed, but the exact tax treatment can vary. Understanding exactly how your different crypto transactions are taxed can not only help you meet your tax obligations, but it can actually help you to make smarter investment decisions.

Important: In the following sections we are considering the tax treatment of an individual investor. If you’re a trader or a different entity such as a Company, Trust or SMSF, your tax treatment may vary.

Buy and sell bitcoin

Capital Gains

When you buy bitcoin on paybtc, it is a purchase of a CGT asset for tax purposes. Whenever you purchase a CGT asset you must record and track the cost base.

When you later sell bitcoin, you’ll need to record the proceeds from the sale. By subtracting the original cost base from the proceeds, you'll be able to calculate and declare the resulting capital gain or loss.

The basic idea works like this:

  • If your bitcoin went up: declare the increase in value as a capital gain.
  • If your bitcoin went down: report the decrease in value as a capital loss.
  • If you held bitcoin over 12 months: it’s eligible for the 50% CGT discount.

The calculations for CGT can get very complicated, which is why our tax team wrote an in-depth guide on how to calculate CGT on bitcoin.

BPAY crypto payments

Capital Gains

The bitcoin to BPAY bill payment feature on paybtc is a unique way for Australian crypto investors to spend their bitcoin on everyday expenses. It allows you to use your bitcoin holdings to pay bills and expenses directly through the BPAY sytstem, which is a widely used bill payment system in Australia. This feature makes it easy to use bitcoin for everyday financial transactions.

The use of the BPAY spend feature on paybtc is taxable, even when it is only used for personal expenses. This is because the bitcoin you are spending is a CGT asset in Australia, and if you held the bitcoin for investment, then any disposal (including paying personal bills through BPAY) will be taxable and will result in capital gains tax.

Example: Imagine you purchase 0.1 bitcoin and held it in your account. Later, the price went up so you decide you'll start to spend the bitcoin while the price is high. You then start paying your utility bills using the BPAY bill payment feature on paybtc.

For every BPAY payment you make, you'll need to calculate the market value of the bitcoin that was disposed, and use that to determine the resulting capital gain or loss on your bitcoin.

How to do your paybtc taxes

By now, you've likely realised there can be a lot to bitcoin tax, and getting it done correctly can be tricky. Let’s find out how you can actually get your paybtc tax sorted.

ATO tax lodgement deadline

Our Australian financial year starts on the 1 July and ends on the 30 June each year, and you can prepare and lodge your tax return anytime after the 30 June up to 31 October.

The tax deadline for individual taxpayers is 31 October. Once you go past that date, your tax return is overdue, and your risk of penalties is increasing.

There is one way that you can easily extend your lodgement deadline though. You can receive an extended lodgement deadline till 15 May when lodging through a registered tax agent.

Some taxpayers find themselves with years of overdue tax returns. Unfortunately, the problem won’t just go away by ignoring it, and it’s only getting bigger in the meantime. With the ATO no doubt using the data collected from paybtc more effectively each year, it’s only a matter of time before they catch up with you.

If you do have overdue tax returns, then it’s always worth working with a good tax accountant. They’ll be able to help you get your tax affairs back up to date. In many cases, investors can even end up receiving tax refunds from years of unlodged tax returns.

Self-lodge vs using an Accountant

When lodging your tax return, there’s two ways to go about it. Self-lodge yourself through myTax (myGov), or by lodging through a tax agent.

Self-lodging your tax return is definitely more affordable, as it means you don’t have to pay for an accountant. However, you’ll need to be much more careful about how you calculate and declare your tax outcomes. Follow our comprehensive guide to self-lodging your bitcoin tax.

Using an Accountant does cost more, but it will save you a lot of headache, and you won’t have to worry whether your tax return was done correctly. You’ll also have someone you can ask questions and get tax advice from. If your bitcoin activity is particularly complex, then it might be worth looking at a bitcoin tax specialist to help you.

Regardless of which approach you take, you’ll need some type of tax software for recording your bitcoin transactions and calculating the tax outcomes.

If you’re an Australian taxpayer, then it’s advisable to use tax software built specifically for Australia, otherwise the tax calculations may not be done correctly, putting you at risk with the ATO

How to select bitcoin tax software

When it comes to managing bitcoin taxes in Australia, choosing the right software is crucial for compliance and ease of use.

Tax regulations and compliance requirements vary significantly across jurisdictions, and what works in one country may not be suitable in another. Australian bitcoin investors need tax software that is specifically tailored to the unique aspects of Australian tax law. It's essential that the software not only calculates these taxes accurately but also updates its tax logic as tax laws evolve.

Ensure the bitcoin tax software is built specifically for Australia. Otherwise you may declare your tax incorrectly or overpay more tax than required.

You should also check for the software’s ability to integrate with popular Australian and international bitcoin exchanges. Having good support for paybtc is a must, but you should also consider any other platforms you trade on.

Quality integrations are vital for maintaining accurate and complete records of all your bitcoin activities.

Bitcoin tax is complex, so having software that is user-friendly and intuitive will be a big help. Look for software that generates detailed, ATO-compliant reports which can be directly used for tax filings or shared with your accountant. You should also consider the level of customer support offered, and whether it's actually coming from an Australian support team.

If you don't have tax software for your bitcoin yet, then sign up for an account with Syla. It's the only tax software built exclusively for Australian bitcoin investors, and it has an assisted file import process for paybtc

Using bitcoin tax software

Bitcoin tax software is designed to make doing your bitcoin taxes much simpler. The software will calculate all the tax outcomes for you, so you only need to import your transactions, make any edits as required, and download your final bitcoin tax report. All the complicated tax calculations are automatically done for you.

It’s really easy using Syla to do your bitcoin tax:

  1. Get started with a free account.
  2. Add paybtc as a data source and import your transactions.
  3. Add any other platforms and wallets.
  4. Review your transactions.
  5. Download your Crypto Tax Report.

Syla does all the heavy lifting for you. Your transactions will be imported and the tax calculations will be done for you. When using LTFO tax optimisation you can even achieve lower tax outcomes than you normally would.

Once you've downloaded your bitcoin tax report from Syla, you can either give it to your tax agent, or you can use it to self-lodge your own tax return.

Importing transactions from paybtc

The first step to getting your bitcoin tax sorted is to import your transactions from paybtc.

Syla supports an assisted file import process for paybtc.

File Import

Using a File Import is an effective way to import all your transactions on paybtc as it’s safe and easy to do.

If you get stuck, we also have an Assisted File Import process.

Download your bitcoin tax report

Once you have all your transactions imported into Syla, you can view them, make edits if needed and import any other Data Sources that you have.

After you’re happy with everything, you can download your Crypto Tax Report.

ATO bitcoin tax report

Tax software for paybtc

It's very difficult to correctly calculate all the tax outcomes of your bitcoin by hand unless you're a tax accountant.

If you are using a tax accountant, then you probably don’t want them doing it by hand either, as it's going to take a long time and cost a lot.

That’s where using bitcoin tax software can save you a lot of time and money, that you'd rather spend doing something else. 😊

Syla is the only bitcoin tax software designed specifically and only for Australia. Syla not only calculates all your tax outcomes to ensure you are ATO compliant, but it also optimises your tax to ensure you pay the lowest bitcoin tax legally possible, saving you both time and money.

  • Best value - $59 AUD for 10,000 transactions.
  • Absolute certainty - purpose-built for Australian tax law.
  • Maximise your tax savings - using Syla's proprietary LTFO method.

👉 Get started for free.


Disclaimer

The information in this article reflects our understanding of existing legislation, proposed legislation, rulings and other tax law, as at the date of issue. In some cases, the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way.

The information provided in this article is purely factual in nature and does not constitute tax advice, financial product advice or legal advice. The information is not, nor is it intended to be, comprehensive or a substitute for professional advice on specific circumstances. If you require professional advice that takes into account your particular circumstances, you should consult an appropriate professional.

Tax Questions

Still have questions?

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