27 Jul Cryptocurrency to be examined closely this tax time
The creations, trade and use of Cryptocurrency are rapidly evolving. While Cryptocurrency has gained popularity as a means of exchanging “money” for groups and services, the tax agency is not on board. If you’re wondering if you have to pay taxes on your bitcoin, the quick answer is yes. According to the Australian Taxation Office, many taxpayers assume their crypto profits are tax-free or only taxable when paid back into Australian dollars. If you bought or sold cryptocurrencies in the previous financial year, your crypto assets are likely to have impacted your tax obligations and tax return. This is especially true if you made money by selling or trading cryptocurrencies; you’ll have to report it on your tax return. In 2021, the ATO will be writing to taxpayers with assets from cryptocurrency, explaining their tax obligations and urging them to review their previously lodged returns.
How the ATO classifies Cryptocurrency
The Australian Tax Office (ATO) does not view cryptocurrency as money. Instead, it is viewed as ‘property’, a CGT asset for tax purposes. Assistant Commissioner Mr Tim Loh explains that gains from cryptocurrency are similar to gains from other investments, such as shares. Simply stated, when cryptocurrencies profits are exchanged for fiat money, other cryptocurrencies, or goods and services, they are taxed depending on the AUD value of the asset.
When discussing Australian Crypto Tax in 2021, keep in mind that cryptocurrencies are classed as property by the ATO and hence are regarded as an asset for capital gains tax purposes. A number of events will trigger the application of capital gains tax to cryptocurrencies. These are some of the actions:
– Selling Cryptocurrency
– Giving cryptocurrency as a gift
– Spending Cryptocurrency in return for goods and services
– Exchanging or trading cryptocurrency for other cryptocurrencies
How to Establish an Effective Crypto Tax Strategy for 2021 in Australia
You may use several easy ways to simplify your cryptocurrency tax administration and assure compliance with all ATO cryptocurrency tax obligations. These strategies include;
– Plan out your cryptocurrency purchases carefully to ensure that you are aware of any potential tax implications.
– Consider any possible tax incentives you may be eligible for.
– Always double-check that you have revealed to the ATO everything you know about your cryptocurrency activity.
For more information on how to keep your business in compliance with the ATO’s regulations and procedures, please don’t hesitate to contact your Conrad Carlile team online or on 07 3871 1522. As experts in accounting, taxation and business advice, we pride ourselves on customer service and helping our clients get the best outcome for their situation.