The Australian Tax Office has reissued a warning to Australian traders to make sure to declare their cryptocurrency profits when reporting their annual revenues.
The taxman made it clear that any profit gained from cryptocurrency trading need to be declared in the annual tax returns. The agency also addressed the raising questions among Australians for declaring digital assets.
Property, Not Currency
Moreover, the agency clarified that if any digital asset is held for a period of more than a year by an Australian taxpayer before selling or spending it, the taxpayer may get a discount of 50 percent on the capital gains tax.
“Let’s say you originally bought AUD 5,000 worth of XEM. If you later traded it for fiat currency of AUD 8,500, then the AUD 3,500 in profit is considered a capital gain, and you’ll need to add it to your assessable income for the financial year – much like you would any gains you make the sale of shares or an investment property,” explained Liz Russell, senior tax agent at Etax.com.au to Lifehacker.
FBS Receives Best Forex Broker Europe 2019 Award by The European MagazineGo to article >>
In January this year, the cryptocurrency market hit its apex as the total market cap went above $800 billion. But since then, the market has been on a continuous downturn and currently holds a little above $120 billion, as per CoinMarketCap’s data.
“If you made an AUD 3,000 loss on the sale of cryptocurrency but an AUD 4,000 gain on the sale of shares, your net capital gain would be the AUD 4,000 gain minus the AUD 3,000 loss, equalling an AUD 1,000 capital gain,” she added.
No Tax for Hobbyists
The tax agency is also exempting any tax on a crypto asset worth less than AUD 10,000, as it considers them an asset for personal use or enjoyment.
It also made the verification of customer identity for all crypto exchanges operating in Australia mandatory. Moreover, any suspicious transaction over AUD 10,000 needs to be reported to the tax agency.
An ATO spokesperson stated: “While there is no specific label on the capital gains schedule or income tax return to identify how many people have invested in cryptocurrency we are still looking at lodgement activity this year to determine any significant impact of cryptocurrencies.”
“However, we have observed through our ATO community channel and advice areas an increase in questions relating to tax obligations of cryptocurrency activity, which we see as a positive in people wanting to do the right thing in meeting their obligations,” the spokesperson added.