The Australian Tax Office (ATO) acting assistant commissioner, Sylvia Gallagher, confirmed that people as young as 18 years were getting involved in cryptocurrency trading and that the authority was paying attention.
Cryptocurrency trade reportedly increased by 64% in 2021 as over half a million Australians engaged in trading digital coins. The ATO is reminding taxpayers that data matching is ongoing, and efforts are being made to ensure no activity slips past them. Gallagher emphasised that much information had already been collected and would be used to ensure a level playing field as taxpayers met their obligations.
The commissioner further flagged three types of transactions that required recording on returns. This included selling or gifting of cryptocurrency, trading or exchanging cryptocurrency, and converting crypto into fiat money.
It was also highlighted that depending on the situation, different tax measures would apply. For instance, where crypto was transferred from one wallet to another without a change in ownership, no capital gains tax (CGT) would apply. The ATO website explains that “if your cryptocurrency holding reduces during this transfer to cover the network fee, the transaction fee is a disposal and has capital gain consequences”.
For a cryptocurrency that is disposed of as part of business assets, the profit was assessable as income and not CGT. Businesses that received payment in the form of crypto should also consider this as part of their income and value it in Australian dollars.
Gallagher however confirmed that gains and losses made from trading in crypto designated for personal use were not subject to CGT. She advised taxpayers to refer to the guidelines posted on the ATO website on the tax treatment of cryptocurrency transactions.
How to reduce the impact of ATO audits and reviews on cryptocurrency trade:
The ATO and other State & Federal government revenue authorities in Australia will continue to find new and innovative ways to deal with those taxpayers that are not paying their fair share of tax or meeting their financial compliance obligations – more than ever that applies to cryptocurrency trade.
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