The Australian Taxation Office (ATO) is concerned that many taxpayers believe their cryptocurrency gains are tax free or only taxable when the holdings are cashed back into Australian dollars.
It is estimated that there are over 600,000 taxpayers that have invested in crypto-assets in recent years.
The ATO is writing to around 100,000 taxpayers with cryptocurrency assets explaining their tax obligations and urging them to review their previously lodged returns. They also expect 300,000 taxpayers report their cryptocurrency capital gains or losses in their tax return.
Generally, if you buy, sell, swap for money or exchange one cryptocurrency for another, it will be subject to capital gains tax (CGT) and must be reported. CGT also applies to the disposal of non-fungible tokens (NFTs).
Some taxpayers think that the anonymity of cryptocurrencies provides a licence to ignore their tax obligations.
The ATO matches data from cryptocurrency designated service providers to individuals’ tax returns, helping us ensure investors are paying the right amount of tax.
It is important to track gains and losses and keep accurate records including dates of transactions and the value in Australian dollars. Holding a cryptocurrency for at least 12 months as an investment may mean you are entitled to a CGT discount if you have made a capital gain. In limited circumstances cryptocurrency may be a personal use asset.
08 8322 1900 greg@itaxaccounting.com.au
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