How Do you use cryptocurrency for investment purposes, this comes with risks due to market fluctuations and public opinion. Investors must also consider the tax implications of their investment, regardless of whether they make a profit or a loss. The tax treatment of cryptocurrency will depend on: how it has been used and how it was reported previously.

If you keep or use a crypto asset mainly for personal use, then it is personal. This includes buying items for personal use or consumption. If the asset is a personal use asset and you acquire it for less than $10,000 if there is a capital gain on its disposal is disregarded. If it cost you more than $10,000 to acquire the asset, the capital gain is not disregarded. Capital losses on personal use assets, including crypto assets, are disregarded for CGT purposes.

Cryptocurrency Use and Capital Gains

Investors who purchase cryptocurrency with the intention of it becoming an investment must report any cryptocurrency events on their taxable income. Cryptocurrency is generally classified as a CGT asset. Transactions such as disposal or exchange, or swap are CGT events, which may result in a capital gain or loss. If the crypto asset is held as an investment, it will not be exempt from Capital gains tax and as a personal use asset. Before calculating CGT on crypto assets, it is essential to have records of all crypto assets and transactions. You then convert the value of the crypto assets into Australian dollars.

Buying and Selling Cryptocurrency

Buying or selling cryptocurrency regularly as a trader will be considered taxable income as it is deemed to be receiving an income from this process. Any capital losses or gains must be reported as income or losses. Businesses that are transacting in crypto assets may need to account for them as trading stock or ordinary income. In these circumstances, the cost of acquiring crypto assets and the proceeds from disposing of them is ordinary income. It will be a deductible expense depending on the nature of the transaction.

The complex tax treatment of cryptocurrency can make it challenging to understand its tax implications fully. This is why it is crucial to seek the advice of a professional adviser to ensure you are compliant and correctly classifying your usage. Speaking with an expert can help you navigate the complicated world of cryptocurrency taxation and avoid potential pitfalls.

To summarize, using cryptocurrency for investment purposes comes with risks, and investors must be aware of the tax implications. Whether it is used for personal use or investment, cryptocurrency must be reported, and the tax treatment will depend on its use. Traders and businesses that transact in crypto assets must also account for them in their tax returns. Seeking the advice of a professional adviser is essential to ensure compliance and accurate classification of cryptocurrency usage.

Participants involved with the NDIS are assisted to live independently and plan out their ongoing future, including their home and living goals. The NDIS Housing in Superannuation can provide support to accessing housing for these individuals, but availability is often limited due to high demand.

NDIS Housing in Superannuation

Using your Self Managed Super Fund to invest in an NDIS property is a mid-to-long-term investment that could supplement your super to fund the retirement you want and deserve.

Having a self-managed superannuation fund gives you the ability to leverage your super by borrowing money from a lender to be able to make more sizable investment purchases, such as NDIS Property.

The rules and regulations around using your SMSF to purchase NDIS property can be quite complicated.

An SMSF can borrow money to purchase a house and land package as long as it is purchased together in one transaction (a one-part contract) as a single acquirable asset where the asset is identified up front as vacant land with a completed house on it.

There are specific considerations to consider to determine whether or not the investment property can be purchased through your SMSF.

Location & Demand

The property must be in an area with high rental demand (typically considered as anywhere within a 50-kilometre radius of an Australian capital city or a 35-kilometre radius of a major city).The areas generally fall into these areas and have a vacancy rate of 1% or below (meaning that the rental demand for investors is there).

Bank Approval

The property purchased through your SMSF must be ideally as new as possible as it needs to be approved by the bank. This is because the property must be positively geared (income from the rent should be higher than the outgoings on the property). At the very least it should have a neutral cash flow (meaning the incomings and outgoings are relatively even).

No Personal Gain From The Property

The last criterion is that you can’t see any personal gain from your investment property. This includes:

• Living in the investment property or installing tenants known to you.
• Completing any repair or maintenance work (can only be done by licensed third-party tradespeople).
• Organising the property's rent (must be done by a licenced third-party property management team)
• Developing or improving the property - the property can only be maintained to its current standards. No renovations can be undertaken.

Some risks can accompany using your SMSF (Self-Managed Super Fund) to invest in NDIS property – the number one is cash flow. Your loan repayments will come from your SMSF. Sufficient income into your SMSF (including NDIS Rent from the tenant/s) needs to be ensured to make the repayments.

Some ongoing costs can come with using your SMSF to purchase a property. These may include:

• Property management fees
• Accounting and auditing costs
• Building insurance, council, and water rates of your investment property
• Body Corp, if relevant
• Business registration of your SMSF with ASIC.

When you retire, there will be two options available to you with the property.

1. Continue to receive rent on your investment property as your pension-based income, or

• Sell the investment property and, once you’ve paid any potential remaining debt on the property, use those funds as your retirement income. You need to reach the preservation criteria to sell the property and not pay capital gains tax.

In short, using funds from your SMSF to purchase an NDIS investment property is not the same as a regular SMSF property investment loan. Doing so should consider guidance from professional advisers and careful planning.

Who pays what, if mum and dad lent me money?

The Bank of Mum and Dad has become one of the largest lenders in Australia, particularly through guarantor loans for purchasing a property. In 2021, 60% of first-home buyers relied on their parents for financial help, with a total of $34 billion in loans towards first-time homes. However, parents need to ensure they are not putting themselves at risk, which is why a divorce settlement agreement should be in place.

To protect any money provided between family members, a written financial agreement is one of the safest ways. Financial agreements allow parties to regulate their financial relationship in the event of separation, giving them more control over financial decisions. Parents often require their children to enter into a financial agreement with their spouse before providing monies for a property purchase. Another option is to provide clear documentation of the money provided between the parties involved, which can be done through a written loan agreement that contains the necessary terms and conditions.

Do you have a divorce settlement agreement in place?

If a child divorces their partner, the settlement must consider the Bank of Mum and Dad loan to the pair. Courts will look for some formality in a loan agreement, including documentation, repayment plan, and any interest charged. It is essential to ensure the circumstances are well documented, seeking advice from licensed professionals and advisers before assisting children with a Bank of Mum and Dad loan. This area is complicated and can have potential complications.

In conclusion, with the rising interest rates, increased mortgages, and higher risks of defaulting on a loan, parents should ensure they protect their money and not put themselves at financial risk. A divorce settlement agreement should be in place to safeguard and protect monies provided to children during this time, and written financial agreements or loan agreements can be used to protect family loans. It is advisable to seek professional advice before providing financial help to children, especially with a Bank of Mum and Dad loan.

Create a divorce loan agreement with your lawyer today here