The Australian tax year is about to draw to a close, you know what this means? Crypto-tax returns. A few months ago, we saw a similar situation in the US that in turn encouraged the crush of the markets. Many people believed that US Tax Day kickstarted a huge cryptocurrency sell off, on the premise that people started to realise just how much tax they would have to pay as a result of their digital assets. Whilst we donât expect to see such an effect as a result of the Australian tax deadline, we should still monitor the situation closely, to ensure nothing adverse comes as a result of this. Hereâs a quick reminder of the Australian Tax Office definition of cryptocurrencies:
âBitcoin is neither money nor Australian or foreign currency. Rather, it is property and is an asset for capital gains tax (CGT) purposes. Other cryptocurrencies that have the same characteristics as Bitcoin will also be assets for CGT purposes and will be treated similarly for tax purposes.âSo, therefore, if youâre an investor with Bitcoin, in Australia, or hold other âsimilar to Bitcoinâ cryptocurrencies you are liable to pay tax on them. As it stands though, there are some âuncertaintiesâ within tax eligibility, who needs to pay tax on their cryptocurrencies and who doesnât. The Motley Fool (Australia), have thus released a quick guide to highlight some of the important points to consider when completing tax returns. Please note that this is in reference to just cryptocurrencies and not FIAT currencies, other, specific tax rules will apply here. Also, please note that this this is not a conclusive guide, if you have any questions about your tax return, you should consult the Australian Tax Office- https://www.ato.gov.au/ According to fool.com.au:
âIf you acquired cryptocurrencies as an investment you will most likely have to pay tax on any capital gain made on the disposal of the asset. Further, you would not be entitled to the personal use asset exemption, however if you held the cryptocurrency for 12 months or more, you could be entitled to the CGT discount of up to 50%.âMoreover:
âDonât forget also that swapping one cryptocurrency for another would result in a capital gain if the price at the time of swapping is higher than when you bought it. In the eyes of the ATO, all you have done here is sell one CGT asset to buy another. If you have been using Bitcoin to purchase items for personal use, then the capital gains or losses that occur may be disregarded for purchases of up to $10,000. It would be advisable to keep receipts or proof of purchases in case the ATO comes calling.âItâs a complicated scenario, as we know, over time, cryptocurrency taxation will become more clear as rules and regulations make way for the current culture of just âwinging itâ but, as it stands, the ATO want your taxes and unfortunately, cryptocurrency is about to take a hit from that too. Remember, if you do have any questions or queries, the ATO are of course your best bet.