Cryptocurrency is an Asset: ATO
Gains and losses made when disposing of cryptocurrency will often be captured in the tax system so if you're selling or buying, you should be able to substantiate your activity.
The ATO has a special taskforce dealing specifically with cryptocurrency. Cryptocurrency is considered an asset for tax purposes, rather than a form of currency.
This means that gains or losses made on disposal or exchange of cryptocurrency will often be captured under the tax system – regardless of whether you're switching between currencies or 'cashing out' your asset into AUD.
You will need to keep records of all of your trades in order to work out whether you've made a taxable gain or loss each time you dispose of an asset.
Capital gains tax can be complex and this is an area that the ATO is looking very closely at, particularly where taxpayers are claiming large losses. Also, some disposals can be taxed as ordinary income which means the CGT discount cannot apply and capital losses cannot be applied against the gains that have been made.
For guidance on how this may impact your CGT liability, contact us on 02 9957 4033.
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.