Australian Tax Office Puts Spotlight on Cryptocurrency Investors

According to a release on May 15, the Australian Taxation Office (ATO) set out its priorities to remind investors and consumers that selling digital assets( such as non-fungible tokens) and cryptocurrencies can attract capital gains or losses tax, just as it would for the sale of physical assets such as properties and shares. The Australian Taxation Office has warned Cryptocurrency investors to declare capital gains or losses on sales of digital tokens.

Do you invest in crypto assets? 💻💰 Get up to speed on which records you need ready for #TaxTime @ https://t.co/nQFqz3Njzd pic.twitter.com/wS1Yi36o2o

— ato.gov.au (@ato_gov_au) May 16, 2022

ATO Assistant Commissioner Tim Loh said, “Crypto is a popular asset, and we expect to see more capital gains or capital losses reported in tax returns this year.”

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

Last year, according to ATO, 600,00 taxpayers invested in digital assets. However, taxes on the sales of digital assets, including non-fungible tokens (NFTs), were identified as one of the areas where the taxman frequently sees errors.

ATO said, “The innovative and complex nature of cryptocurrencies can lead to a genuine lack of awareness of the tax obligations associated with these activities. Also, the pseudonymous nature of cryptocurrencies may make it attractive to those seeking to avoid their taxation obligations.”

The tax office declared that it had been collecting tax on cryptocurrency transactions from all Australian-based cryptocurrency exchanges since 2014-15 for data collection.

ATO assistant commissioner Tim Loh said, “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.”

ATO’S GUIDELINES ON CRYPTO TAXES

However, according to the ATO’s guidelines, declaring a net capital loss doesn’t affect any of their other income; the taxpayer is entitled to a reduction on future capital gains. ATO also said in its latest release that since February, it has already set out its stance on taxpayers. It emphasized that NFTs have been included as part of assets in which taxpayers are liable to pay capital gains if sold for a profit.

The ATO also added that it would differentiate between workplaces to charge the taxes. It would be looking at work-related expenses to differentiate those working from home and remotely from those working physically.

Loh added, “Some people have changed to a hybrid working environment since the start of the pandemic, which saw one in three Aussies claiming working from home expenses in their tax return last year. If you have continued to work from home, we expect to see a corresponding reduction in car, clothing and other work-related expenses such as parking and tolls.”

He concluded, “If your working arrangements have changed, don’t just copy and paste your prior year’s claims. If your expense was used for both work-related and private use, you could only claim the work-related portion of the expense. For example, you can’t claim 100% of mobile phone expenses if you use your mobile phone to ring mum and dad.”