As cryptocurrencies continue to grow in popularity all over the world, there is still a lot of confusion about how they work. In this cryptotax article, we will take a look at how cryptocurrencies function in Australia. We will also discuss the tax implications of using cryptos in the country. So if you are curious about crypto and want to know more, keep reading this cryptotax article!
You might not think that cryptocurrency is a taxable asset in Australia, but you’d be mistaken. The Australian Taxation Office has been targeting crypto earnings for awhile now. In early 2022, they announced four key focus areas they will consider during tax season: record-keeping; work-related expenses; rental property income and deductions; and capital gains from crypto assets, property, and shares.
If you have made any money through cryptocurrency-related activities such as buying, selling, or earning interest on non-fungible tokens during the financial year, then you will need to declare your gains and losses on your tax return.
Also, cryptocurrency exchanges must register as financial service providers with the Australian Transaction Reports and Analysis Centre (AUSTRAC).
The ATO has access to crypto transaction data and information, provided by domestic and international exchanges, dating back as far as 2014 and is always expanding its sources and tracking capabilities.
The type of information they collect from you can include your name, date of birth, address, Australian Business Number (ABN), transaction and account details, linked bank accounts and digital wallets, types of cryptocurrencies traded; as well as the amount, fiat conversion rates and more.
If your cryptocurrency transactions take place on overseas exchanges, you must include them in your Australian tax return. Otherwise, you could be charged with major penalties for tax evasion.
The ATO views cryptocurrency as an asset and not a currency, which may come as a surprise to some. However, this change in perspective means that if you have traded cryptocurrencies in any way – for example, by selling, gifting or exchanging them – then you must include these details in your income tax return.
The capital gain or loss is what you receive from selling an asset minus the original cost of the asset. This includes any fees charged when initially buying the asset.
By claiming any losses on your crypto investments, you’re effectively establishing a net capital gain or loss for that year, which can be carried forward to future years. If you have a net capital loss this tax year, it can be used to offset gains in future years.
If you are looking for a reliable and user-friendly tax calculator to help calculate your cryptocurrency taxes in Australia, look no further than Crypto Tax Calculator Australia. With three different plans available to cater to your needs, we have got you covered. So why not give us a try today? You won’t be disappointed!