Many crypto investors in Australia may soon face a hefty tax bill
after a record-breaking year for cryptocurrencies in 2021. According
to the estimates of the Australian Taxation Office (ATO), between 500,000 and 1 million
Aussies own cryptocurrencies. Remember that cryptocurrencies are associated with a high
degree of risk, so it goes without saying that you should do your homework before investing.
In March 2020, the ATO announced its plans to target and audit
crypto traders. It sent up to 350,000 letters to individual crypto traders
reminding them of their tax liabilities. Many crypto investors are now wondering what their
tax obligations are. In this article, we have answered the most common crypto tax queries
of Australians. Please subscribe to the channel I’m sage for kalkinemedia.
The Organisation for Economic Co-operation and Development Alongside the Crypto-Asset Reporting
Framework (CARF), are developing a comprehensive review of the Common Reporting Standard.
This is to prepare the operating of the CRS to be more aligned with world governments
and the increase in crypto investing. To speed up the process the G20 is working with OECD to
implement a framework enabling the automatic exchange of information on crypto-assets.
The OECD is requesting public comment from those involved in the sector.
If you can provide information from your crypto tax dealings you are invited to send comments
no later than 29 April 2022 by e-mail (in Word format) to taxpublicconsultation@oecd.org.
Which crypto transactions are liable for taxation?
As per the ATO website, CGT liability may occur when you dispose of your cryptocurrency. Here
disposal does not always mean selling any cryptocurrency. It may also include
gifting cryptocurrency, trading or exchanging a cryptocurrency for another cryptocurrency.
Whenever you convert any cryptocurrency to a fiat currency such as the Australian
dollar or use cryptocurrency to buy goods or services, then it will be considered a disposal.
If any capital gain arises on the disposal of cryptocurrency, then all or part of the
capital gain may be taxed. However, capital gains/losses arising out of the disposal of
cryptocurrencies that are personal use assets are excluded while calculating your tax liability.
Worth mentioning here is that if the crypto disposal is a part of your regular business,
then the profits arising from that transaction will be assessable as ordinary income and not as
a capital gain. Another thing to be noted here is that each cryptocurrency held in a digital wallet
is considered as a separate CGT asset for taxation purposes.
When will you fall under the 'trader’ category?
From the taxation point of view, traders are individuals or businesses that conduct a business
involving cryptocurrencies. The factors that will be considered by the ATO for deciding if
you fall under the category of 'Trader' are: Whether you are conducting your activities
for commercial reasons and in a commercially viable way. If you are running the business
in a professional way – e.g. preparing business plans, acquiring capital assets or inventory as
per the business plan. Preparing and maintaining accounting records and promoting your business
The Digital Law Association can be a good resource
to help clear up any doubt and to prepare you for your next visit to your tax agent.
Other than cryptocurrency gains from personal use assets, a majority of gains/losses with
respect to cryptocurrency transactions are taxable. So, it is better to get prepared and
show it in your tax return. If you are seeking more information on taxation of crypto assets,
then it is advisable to visit the ATO website for details.
If you like this information please like share and comment on the video below subscribe to the
channel and press the bell icon to be notified of the latest videos for more information and
regular updates please head to the website kalkinemedia.com I’m sage for kalkinemedia.