Donations of cryptocurrency

The ATO has released some guidance on key issues to keep in mind when clients seek to claim deductions for donating cryptocurrency assets to charities. The starting point in these cases is to confirm that the entity receiving the assets is endorsed as a deductible gift recipient (DGR) and to establish whether the not-for-profit organisation is set up to accept cryptocurrency assets.

As cryptocurrency is treated as a type of property for the purpose of the deduction rules for gifts this makes the process more complicated compared with situations where clients are making cash donations.

In addition to considering whether clients can claim a deduction for a donation of cryptocurrency assets, it is important for clients to recognise that the donation might trigger CGT implications. If the client is transferring the assets to another party for no consideration then the market value substitution rules will need to be considered in calculating the capital gain or loss on disposal.

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