Australian Taxation Office Prioritizes Crypto Capital Gains for Tax Time

Key Insights:

• Australian Taxation Office outlines crypto capital gains for tax time 2022.
• ATO would be “taking firm action” to deal with taxpayers who try to counterfeit their records.
• ATO will also focus on record-keeping, work-related expenses, rental property income, and deductions.

The Australian Taxation Office (ATO) has included crypto capital gains among four key focus areas for this year’s tax time.

Capital gains warning for crypto sellers

The country’s principal revenue collection body announced today that any crypto assets, including non-fungible tokens (NFTs) that are sold or disposed of this financial year, should include a capital gain or loss and be recorded in the tax return.

According to ATO’s assistant commissioner Tim Loh, the tax body targets “problematic areas” where people make mistakes. He noted,

“Crypto is a popular type of asset, and we expect to see more capital gains or capital losses reported in tax returns this year. Remember, you can’t offset your crypto losses against your salary and wages.”

Australia has generally been regarded as a relatively friendly and stable jurisdiction for cryptocurrencies. Last week, bitcoin (BTC) and ether (ETH) ETFs managed by Sydney-based ETF Securities, in conjunction with Switzerland’s 21Shares, started trading on the Cboe Australia exchange.

ATO has indicated that cryptocurrency is a capital gains tax (CGT) asset. This is because of the increased adoption of digital assets in the Asia-Pacific region. The latest Roy Morgan research into Australians’ investments showed that 5% or over 1 million Australians now own at least one cryptocurrency. According to Loh,

“Through our data collection processes, we know that many Aussies are buying, selling, or exchanging digital coins and assets, so it’s important people understand what this means for their tax obligations.”

The capital gain rules also apply to property and shares sold this financial year. Other areas of focus for the tax authority include record-keeping, work-related expenses, rental income, and deductions.

The ATO stressed that it would take “firm action” against taxpayers who deliberately try to falsify records.

Crypto taxation in Australia

The ATO has been clarifying the operation of the tax law on cryptocurrencies. For income tax purposes, the ATO views crypto as an asset held or traded and not at par with fiat currency. The authority has stated that tax implications for crypto holders depend on the purpose for which the crypto is acquired or held.

The taxation body ATO has previously created a special task force to tackle cryptocurrency tax evasion. Also, it collects bulk records from Australian crypto-designated service providers in order to conduct data matching to ensure that holders are paying taxes appropriately.