Cryptocurrency under microscope this tax time

The Australian Taxation Office (ATO) is reminding cryptocurrency traders their capital gains are not tax-free and their gains and losses must be declared, even if they’re not cashed back into Australian dollars.

ATO assistant commissioner Tim Loh says gains from cryptocurrency are similar to gains from other investments, such as shares.

In other words, they’re subject to capital gains tax and must be reported.

“We are alarmed that some taxpayers think the anonymity of cryptocurrencies provides a licence to ignore their tax obligations,” Mr Loh says.

“While it appears that cryptocurrency operates in an anonymous digital world, we closely track where it interacts with the real world through data from banks, financial institutions and cryptocurrency online exchanges to follow the money back to the taxpayer.”

To make tax-time reporting easier, Mr Loh recommends cryptocurrency traders keep accurate records, including:

• dates of transactions
• value in Australian dollars at the time of the transactions
• what the transactions were used for
• who the other party was, even if it’s just their wallet address.

Businesses or sole traders that are paid cryptocurrency for goods or services will have those payments taxed as income based on the value of the cryptocurrency in Australian dollars.

Holding a cryptocurrency for at least 12 months may mean you’re entitled to a Capital Gains Tax (CGT) discount if you’ve made a capital gain.

Get expert advice

If you have any questions about your cryptocurrency or other tax obligations, please call Modoras on 1300 888 803.

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