Can I offset equipment and electricity costs?
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How much tax would I pay? Answer Generally, when undertaking Bitcoin mining activities, it needs to be determined by analysis of your own activities as to whether this volvo carrying on a business or not: If your circumstances are such that you are mining the business mining Bitcoin mining you will need to treat your activity the same way as any other business activity. If mining are carrying on a business of bitcoin mining: All reporting to the ATO must be made in Australian dollars.
To convert the value of Bitcoin to Australian dollars you can use the Bitcoin value as published by a reputable exchange on the date of the relevant transaction.
Where you are in the business of mining bitcoin, any income that you derive from the transfer of the mined bitcoin to a third party would be included in your assessable income. Any expenses incurred in respect to the mining activity — including electricity costs – would be allowed as a deduction.
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The cost of capital assets, such as bitcoin and software can be depreciated over their effective life. If you are in business you may be able to apply the small business instant asset write-off to the cost of capital assets. As in any other business, proceeds from the disposal of trading stock represent assessable income.
There are three methods for working out the value of trading stock at end of the year. Losses you make from a business of Bitcoin mining will be deductible against your other income, however losses you make will be subject to bitcoin Non-commercial loss provisions.
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Your net income roughly income less deductions is the amount that is included in your assessable income, and you will pay tax on this income at your marginal rate. If you have undertaken some Bitcoin mining activities in a way that is not part of a business your mined Bitcoin would constitute holding of an asset, and the Bitcoin you bitcoin would be a be a capital gains tax CGT asset.
This means that the CGT rules would apply. No deductions would be allowable. The CGT rules would need to be applied on the disposal of volvo Bitcoin.
Although you may view your mining activities as a hobby, the personal use asset exemption rules would not apply to exclude any capital gains made on disposal of the bitcoin. The exemption applies on volvo basis of how you use or keep the bitcoin that you have acquired from your previous mining activities. The primary situation that the ATO volvo that Bitcoin can be used or kept mainly for personal use or enjoyment is where it is acquired and then kept temporarily in order to obtain personal use items- such as paying for goods or services with cryptocurrency..