Gifting and donating crypto: the tax questions involved
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 6 min
In short
Giving or donating crypto raises questions for both the giver and the recipient, and can involve taxes beyond income tax, such as gift tax. Treatment depends on the relationship and the manner of transfer, so check National Tax Agency guidance and consult a tax professional before you act.
Key points
- The giver and the recipient each have separate questions to work through
- Taxes other than income tax, such as gift tax, may be involved
- The analysis shifts with the relationship and the manner of transfer, so check before acting
- Recipients should record how they acquired the asset, for the eventual sale
Definition
Transferring crypto to another person without consideration, and the tax consequences that can arise for both sides — notably involving taxes beyond income tax.
Handing crypto to someone looks like a single wallet operation, but several tax questions open at once. Does the transfer count as a disposal for the giver? What has the recipient acquired, and at what value? And where the transfer between individuals is without consideration, a tax other than income tax may come into play.
The point to stress is that this is not an area to work out for yourself. Whether the other party is family or a third party, whether there truly is no consideration at all, and the purpose of the transfer all shift the analysis — and because more than one tax can be involved, looking at only one side leads to omissions.
Donations are the same. Giving crypto to an organisation raises both the treatment of the transfer itself and the separate question of whether any donation treatment is available, which can also depend on the nature of the recipient organisation. Assuming 'it is a donation, so nothing applies' is risky.
What the recipient must do is keep records: from whom, when, what asset and how much, and its value at the time. Without that, explaining the cost basis on a future sale is impossible. Keep the transaction hash and anything documenting the circumstances.
Options narrow considerably once the transfer has happened. Regardless of size, the reliable approach is to talk to a tax professional while the gift or donation is still at the planning stage.
Watch out for
- · This page is a general orientation, not tax advice
- · Taxes beyond income tax can apply — consult a tax professional before acting
- · Rules change; take the current position from National Tax Agency guidance
Frequently asked questions
If I just send to a family member's wallet, does nothing happen?
Moving between your own accounts and transferring to another person are treated quite differently, and family members are still other people. Check with a tax professional before you do it.