What you need to know about cryptocurrency and taxes

29 Apr 2021, 08:08

Bitcoin and cryptocurrencies, in general, present a seismic shift in the way people trade for goods and services. It might not have seemed that way when bitcoin first appeared in 2009, but since then, altcoins have been adopted in ever greater numbers and for a variety of purposes.

First and foremost, they are a means of exchange or a unique investment opportunity. In the realm of online gambling, they are ideal because bitcoin can cross borders quickly, safely and with minimum fees.

Bitcoin is also completely anonymous, while all transactions are recorded on the blockchain immutably forever.

How to use bitcoin

Despite bitcoin’s popularity, many players are unsure of how to use it. Fortunately, it is a cinch to buy, store and gamble with cryptocurrency. The first step is acquiring some, which can be done with a credit card payment at a number of safe, secure exchanges.

One common exchange is Coinbase which is a US-based company listed on the New York Stock Exchange. Exchanges like Coinbase can even store your crypto for you, so using it is a breeze. Alternatively, some people buy physical wallets or use online wallets to store their crypto.

Once you are the owner of bitcoin or another digital coin, you can send it easily from your wallet to another. You do this by entering the recipient’s unique address when making a transfer from your wallet.

Deposits and withdrawals are processed quickly, and in moments you can be gambling with bitcoin.

Cryptocurrency and taxation

Each country has its own laws regarding bitcoin taxation though many follow similar lines. In Australia, a tax occurs when you dispose of cryptocurrency and you make a capital gain. This could be via:

  • Selling or gifting cryptocurrency;
  • Trading or exchanging cryptocurrency;
  • Converting cryptocurrency to fiat such as dollars;
  • Using cryptocurrency to obtain goods or services.

However, some capital gains or losses that are deemed personal use may be disregarded. Broadly speaking, cryptocurrency is classed as such if used principally to buy things for personal use.

Bitcoin is not considered personal use if it is mainly used as:

  • An investment;
  • Part of a profit-making scheme;
  • In conducting business.

Similar rules may apply in different jurisdictions, or they may be looser altogether. In countries like Singapore, Malta, or Switzerland, there is no VAT levied on cryptocurrencies. These countries perceive a positive future in regards to crypto and promote a business-friendly environment in response.

To sum up, using cryptocurrency to gamble is a more straightforward process than many might suspect. Buying bitcoin is similar to purchasing anything else on the net, and it is just as conveniently stored. The legal issues regarding taxation in Australia are clear, and can easily be checked, no matter which country you reside in.