ATO Crypto Tips For Small Businesses

Crypto is becoming more mainstream within the small business community, including small business owners who pay salary and wages in crypto and/or receive it as payment, and established traders who buy crypto stock as a business investment.

It is therefore important that taxpayers understand how crypto assets may have an impact on their tax obligations.

The ATO has the following crypto tips for small businesses:

1. where taxpayers run a crypto business, the cost of buying crypto assets is a deductible expense; 
2. where taxpayers are paid in crypto assets for their services, the monetary value of the crypto assets is classified as ordinary income of the business;
3. where taxpayers are using crypto assets to pay salary or wages under a valid salary sacrifice arrangement with their employee, this is a fringe benefit; and
4. the tax treatment of a profit made from the sale of crypto will depend on whether the taxpayer is carrying on a crypto asset business or rather is an investor, as follows:
   • If the taxpayer is carrying on a crypto asset business, the crypto assets are treated as trading stock and the proceeds of selling them are assessable as ordinary income.
   • If the taxpayer held the crypto assets as an investment, the sale of the crypto assets is a CGT event.

Taxpayers should keep records of their crypto transactions to prevent damage and protect information from being changed. They can refer to Keeping crypto records on the ATO's website for information on what records they need to store.

To find out more, visit the Australian Taxation Office website.

How Trinity Can Help.

At Trinity Advisory, we specialise in tax accounting, business advisory and coaching services for small businesses located in and around Cairns (116 Mulgrave Road, Parramatta Park QLD 4870) and the Sunshine Coast (2/8 Maroochydore Road, Maroochydore QLD 4558).

Should you need any taxation or accounting advice for your business, get in touch with Trinity Advisory today. Our team of expert Business Accountants, Advisors and Coaches are here to help!

Ref: ATO website, Small Business Newsroom, 13 March 2024