Qoin Cyrptocurrency Tax Consequences

14 December 2020 – Please note – this is an ‘evolving’ page and may change in the future as more information comes to light.

Want the final say? Book a call with Scott Kay www.calendly.com/ipas

 

Qoin is a Cyrptocurrency that has been launched by Bartercard. When I originally posted this article on 13 July I said that Qoin has a few elements that are very clever (which I still agree).

This article is intended to help Qoin agents & merchants understand the tax implications of Qoin.

 

Qoin is not cash – it is treated more like shares

 

 

1. You probably can’t escape that Qoin gains will be taxed

A “personal use” CGT asset

https://www.ato.gov.au/general/gen/tax-treatment-of-crypto-currencies-in-australia—specifically-bitcoin/?page=2#:~:text=Cryptocurrency%20is%20a%20personal%20use,a%20profit%2Dmaking%20scheme%2C%20or

Unfortunately

 

Qoin agents receive a set Qoin amount for bringing new merchants into the Qoin system.  (e.g. Q100).

 

As the value of Qoin has increased over time and is currently not tradable – there are a few questions about how this income will be taxed.

 

There are 3 ways that Cryptocurrency can be taxed however Qoin agents should likely (execept in very rare circumstances) be taxed as a Business/Trader.

 

Key Information 1: Value of Cryptocurrency in Australian dollars as Ordinary Income

 

From the ATO : If you receive cryptocurrency for goods or services you provide as part of your business, you need to include the value of the cryptocurrency in Australian dollars as part of your ordinary income. This is the same process as receiving any other non-cash consideration under a barter transaction.

One way of determining the value in Australian dollars is the fair market value which can be obtained from a reputable cryptocurrency exchange.

Where you use cyrptocurrency to purchase tax deductible items – you should be entitled to a tax deduction (and to claim GST on your BAS)  based on the market value of the item acquired. This assumes you have a Tax Invoice, etc.

 

Transaction 1 – 245.1927 Qoin ($165 AUD)

Clicking the transaction detail shows the AUD amount at the time of transfer.

This means that the business has earned $165 AUD and this is reportable income for income (and GST purposes) when the transaction was dated.

I note that some businesses are registered for GST purposes on a “cash” basis – however the receipt of Qoin will be the cash receipt date – so taxable and GSTable on the date it was received.

 

Year end

The value of Qoin has increased. Say the 245.1927 Qoin is now worth $250 AUD.

 

Transaction 2 – Selling what you earned

If you use the Qoin to purchase a business asset, you would be able to claim a tax deduction for $250 AUD.

More

 

Can cyrptocurrency be a personal use CGT asset?

(Buy for under $10k – then use for personal use – ignore the gain).

https://community.ato.gov.au/t5/Tax/Can-cryptocurrency-be-a-personal-use-asset/ta-p/3393

 

Cyrptocurrency used in business

https://www.ato.gov.au/general/gen/tax-treatment-of-crypto-currencies-in-australia—specifically-bitcoin/?page=3#Receipt_of_cryptocurrency_for_services_provided

 

Transacting with Cyrptocurrency

https://www.ato.gov.au/general/gen/tax-treatment-of-crypto-currencies-in-australia—specifically-bitcoin/?page=2#:~:text=Cryptocurrency%20is%20a%20personal%20use,a%20profit%2Dmaking%20scheme%2C%20or

Taxing cryptocurrency – 7 things you need to know