If you keep up to date with emerging technology or stocks, you will probably be following how ‘cryptocurrency’ is going. The ATO estimates more than 600,000 Australian taxpayers have invested in crypto assets.
The ATO is working hard to erase the misconception that crypto currency gains are exempt from tax when cashed back into dollars.
Over the full course of the 2020-2021 financial year, 1 BTC (Bitcoin) sat at about $12,409 AUD. Then the closing price for 1 BTC on 30 June 2021 was $47,544 AUD.
Generally, as an investor, if you buy, sell or swap currency, or exchange one cryptocurrency for another, the transaction is subject to Capital Gains Tax (CGT) and must be reported. Therefore, Cryptocurrency gains are treated in the same way as gains from other investments, such as shares.
Tim Loh, ATO’s assistant commissioner sent out a statement addressing this. He warns, “While it appears that cryptocurrency operates in an anonymous digital world. We closely track where it interacts with the real world through data from banks, financial institutions and cryptocurrency online exchanges. Then we follow the money back to the taxpayer…”.
Similar to normal record-keeping requirements for other types of income and deductions, it’s best to keep records as you go. Or it has been recommended by the ATO to use spreadsheets or crypto accounting software.
For further assistance or guidance on cryptocurrency, please reach out to our team on (07) 5536 3755.