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I have a permanent residency in Australia, and I have a bank account there. A friend asked me if he can transfer money to my account and then I send it to a bitcoin exchange that he wants to work with. He wants to do it this way because he lives in a country that is not recognized by the exchange. My question is, what are the potential tax impacts of doing this for him?

(Note: my focus is not on the safety or other implications of performing this transaction, only the legal / tax impacts)

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    Is this a really good friend who you trust with your life? Because having someone send you money to send on somewhere else is a classic scam. Commented Dec 14, 2017 at 17:06
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    He is an old friend and I know him well, so no it’s not a scam. And I want to send the money to his account on the exchange not mine.. will I be liable for taxation? Commented Dec 14, 2017 at 17:19
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    Sounds like friendship problems waiting to happen. My advice - don't become a financial intermediary for your friend, regardless of how god a friend he is. What happens if the next day, value of bitcoin gets cut in half (or doubles)? Who gets the loss / profit? See related answer here: money.stackexchange.com/a/84861/44232 Commented Dec 14, 2017 at 18:26
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    Ok thanks for the responses and I appreciate your concerns but my focus is on the taxation laws in Australia if anyone can help? Commented Dec 14, 2017 at 19:37
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    @user1221612 I've edited to be more in-line with what you're asking about, hopefully this suits your intent. Commented Dec 15, 2017 at 15:09

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I don’t think there is really any tax implication from your viewpoint. You’re simply acting as his agent, or potentially a constructive or implied trustee.

If you were to make profit on the transaction then you’d have to declare that profit as income.

If you’re going to keep the bitcoin in your name then you’re effectively holding the bitcoin in trust where he is the beneficiary.

Imagine the situation where an office colleague gives you a fiver for you to get him a cup of coffee - you’re acting as his agent.

If you wanted to get into the details, the areas of law are (1) agency and (2) trust law.

If you or your friend wanted an arrangement that was legally enforceable (you wanted to reserve the right to sue each other) then you might want to get a lawyer to draft an agreement but that is probably overkill if they are a friend that you trust.

These concepts of trust and agency tend to apply only in “Common Law” jurisdictions based on English law (Australia, Canada, New Zealand, US, etc.)

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  • Thanks, this is what makes sense to me but is this a legal fact or personal opinion? Commented Dec 17, 2017 at 4:53
  • I have updated my answer. It is a well known legal principle.
    – xirt
    Commented Dec 17, 2017 at 15:23

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