Don’t fool yourself into believing that your cryptocurrency transactions are going unnoticed by the ATO. Even if you are just dabbling in the world of crypto, it is important that you acknowledge the tax implications that it might have.
You need to let your accountant know that you own crypto so that together, we can decide what your tax obligations are and how to move forward with them.
The ATO have means of ensuring that nothing slips through their nets and they have data matching and record keeping tools for cryptocurrency that date back to 2014.
Trades in cryptocurrency shot up 64% in 2021, with people even reporting that their kids are holding coins. It is getting really big.
Of course the ATO are therefore going to be a few steps ahead of the game. They are not afraid to use the technology and the records that they have on hand and the more popular it becomes, the more of an emphasis the ATO will place on ensuring that people adhere to their obligations surrounding their cryptocurrency investments.
Depending on the purpose of your transactions, different tax obligations will apply. You may be liable for CGT if you:
- Sell or gift cryptocurrency
- Trade or exchange crypto
- Convert your coins into real cash
Situations where cryptocurrency would not attract CGT was when it was simply transferred from one wallet into another, unless the holding was reduced and it became a disposal, perhaps by transaction fees.
There are times that the profit made from the disposal of cryptocurrency would be treated as income and taxed as such. If a business or individual was paid in cryptocurrency, then that too, would be treated as income.
Over half a million Australians hold cryptocurrency now and this is expected to grow. It is a volatile investment strategy, seeing great gains and great losses in short amounts of time.
If you have cryptocurrency or are interested in gaining some, then do have a chat with one of our team to ensure that all the implications of crypto investments are understood.
The information that you can glean is invaluable and you can benefit from the confidence that some knowledge in these matters can bring.
Just make sure that you understand your tax implications so that you don’t get caught out unawares by the ATO as they continually seek to crackdown on undeclared cryptocurrency trading and activity.
Contact YBM today at our Orange office on 02 6362 1533 or our Molong office on 02 6366 8049