ATO closely tracking cryptocurrency transactions

More than 600,000 Australians have invested in crypto assets in recent years, and undoubtedly many of them need some advice as we head towards tax time.

Australian Taxation Office assistant commissioner Tim Loh says gains from cryptocurrencies like bitcoin and ethereum are treated similarly to gains from other investments such as shares.

Movements within a digital wallet also count, so it’s a mistake to think tax is only payable once all of your crypto holdings have been sold.
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“Generally, as an investor, if you buy, sell, swap for fiat currency, or exchange one cryptocurrency for another, it will be subject to capital gains tax and must be reported,” Mr Loh explained.

“CGT (capital gains tax) also applies to the disposal of non-fungible tokens (NFTs).”

It’s a big mistake to think that because cryptocurrency seems to operate in an anonymous digital world, your transactions won’t be seen.

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

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Crypto transactions are being closely tracked by the ATO, which matches data from cryptocurrency designated service providers, banks and other financial institutions to an individual’s tax return.

So how do you ensure you’re not falling foul of your tax obligations given cryptocurrencies can be complicated?

“The best tip to nail your cryptocurrency gains and losses is to keep accurate records, including dates of transactions, the value in Australian dollars at the time of the transactions, what the transactions were for, and who the other party was, even if it’s just their wallet address,” Mr Loh said.

Use good cryptocurrency accounting software or an old-fashioned spreadsheet, he advises.

For businesses or sole traders that are paid cryptocurrency for goods or services, these payments will be taxed as income based on the value of the cryptocurrency in Australian dollars at the time of the transaction.

And if you hold cryptocurrency for at least 12 months as an investment, you may be entitled to a CGT discount if you have made a capital gain.

Check out this ATO fact sheet for more information.

This news is republished from another source. You can check the original article here

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