Australia is moving towards requesting all cryptocurrency exchanges to report to the Australia Taxation Office, in order for them to collect Capital Gains Tax on all cryptocurrency gains, which essentially means that they will be classified as assets.
Liz Russel, who is a senior tax agent at a private Australian online tax return service revealed how the Australian Taxation Office will treat the cryptocurrency gains, so people know what to expect from it. Australia is in the middle of an ongoing debate, regarding the classification of cryptocurrencies. This is the case for a number of countries, as there is no clear way in how they should be classified.
Russel has revealed though that the Australian Taxation Office will actually regard them as assets, saying;
“There is a long-running debate over what cryptocurrency actually is – whether it’s an asset, currency or collectible – but the ATO as made it clear that it treats cryptocurrency as an asset…That means it’s subject to the same capital gains tax (CGT) provisions that apply to real estate and shares.”
The US Internal Revenue Service agrees, and treat cryptocurrency transactions as if they were property transactions.
It is important to know what this means, especially if you live in Australia. Quite simply, Australians will have to pay the CGT on any profits that they have made from trading cryptocurrencies. This only applies to the profit made, not the total. Whilst this can be seen as a disadvantage, it also means that the losses that might be incurred from trading cryptocurrencies can also be written off, which would mean that it essentially lowers the CGT that you are subjected to.
Russel also noted that the ATO can cross check many different data sources, with the aim of seeking those traders out who are not declaring their cryptocurrency income. This goes hand in hand with the country’s recent move to collect information to determine the traders identity and to monitor transactions, before reporting anything they feel to be suspicious.