Have you perhaps dipped your toe into the cryptocurrency world lately? It is definitely growing in popularity. Approximately 1 in 6 Aussies are taking the plunge – including 31% of Gen Z – but don’t forget to make sure your stay on top of the tax side of things. The ATO is paying extra attention to crypto investors, we like you to be well informed.
The growth in popularity means that regulators have had some difficulty keeping up, which has created some confusion on guidelines on how to include crypto on your tax return. If you aren’t sure about this – you are so not alone! One misconception from crypto we have encountered is that the income from crypto is tax free, but this is not the case.
This is a few other common areas people are unsure of:
Can the ATO see my cryptocurrency holdings?
Yes, they can. The ATO has agreements with the Australian Data Exchange that gives them the ability to match information with personal tax returns. They can definitely see if you buy crypto, and if you sell. If you are completely transparent in your tax return, then you need not worry!
Can a tax agent (aka us) help work out the tax implications of crypto trading?
Yes, our accountants are experienced and up to date with crypto tax changes. We can give you advice on how to correctly manage your crypto holdings.
What is the difference between crypto trading and crypto investing?
If you are buying crypto currency for the future and plan to buy it and hold it for a long-term gain, then you are an investor. If you are buying and selling over short term to make profits, then you are a trader. An investor will need to pay capital gains tax on any profits made when selling, but traders will need to list their profits as business income and pay income tax accordingly.
If you have already purchased cryptocurrency or are looking to get into the market, we strongly advise to look beyond the information offered by crypto exchanges and book an appointment in with us to speak to a professional. We want to you stay on top of things and we don’t want you on the wrong side of the ATO!