The Australian Taxation Office (ATO) wants taxpayers with crypto assets to make sure they know their obligations so they can lodge right the first time this tax time.
Assistant Commissioner Tim Loh explains "We know crypto assets and their tax implications can seem complicated. That's why our focus is on helping people get it right."
"Over one million taxpayers will have a message appear as a reminder when they prepare their tax returns saying they may have capital gains or capital losses from crypto to declare" said Mr Loh.
Generally, crypto is considered an asset for capital gains tax (CGT) purposes and you must report when there has been a disposal of a crypto asset, which is generally when you no longer own the asset including:
- trading, selling or gifting crypto
- exchanging one crypto asset for another crypto asset
- converting crypto to a fiat currency, for example to Australian dollars (AUD)
- using crypto to obtain goods or services.
When the disposal of a crypto asset occurs, investors may have a capital loss or a capital gain, which needs to be included in their tax returns. All records for crypto transactions need to be kept to work this out.
If an investor holds onto a crypto asset for 12 months or more, they may be eligible for a 50% CGT discount.
If there is a capital loss
A capital loss can only be made when an asset is disposed of and must be reported in the year they occur. Paper losses can't be claimed when an asset decreases in value. Capital losses can't be offset against other income like salary or wages but can be used to offset against capital gains from the current financial year or be carried forward to offset capital gains in future financial years.
