Over its concerns about crypto investors evading payment of taxes, the Australian Taxation Office (ATO) goes on a mission to correct the wrong belief of cryptocurrency gains being taxed only when they are converted to fiat money.
The office explained contrary to the belief of people that digital coins are currencies, they are classified as assets and as such, gains from digital currency trades are like gains from other investments and are therefore subjected to taxes.
Along this line, ATO will send warning letters to 100,000 taxpayers, instructing them to review the returns they have filed previously. An additional 300,000 Australians, in their 2021 tax return filing, will be required to declare their gains and losses in dealings involving cryptocurrencies.
NFTs are covered as well
Digital assets known as non-fungible tokens (NFTs), as it appears, are covered with the tax regulation, as ATO confirms, with Assistant Commissioner Tim Loh saying Australian capital gains tax also applies to the disposal of the asset class.
Meanwhile, the official also added citizens holding crypto funds on a long-term basis, for 12 months or more, are entitled to tax discounts.
Cryptocurrency payments received by businesses or sole traders for providing goods and services, on the other hand, will be taxed as income based on the prevailing prices of the digital coins calculated in Australian dollars.
Helping Aussies file correct declarations
As an acknowledgment of the complexity of the matter, the office turns its focus to helping filers have their declarations correctly filled.
Loh said in order to accurately report cryptocurrency gains and losses, filers need to keep a record of transactions that include important information such as date and time, its value in Australian dollars, what the transactions were, and who the other party was.
That way, when it’s time for filing tax returns, all necessary data are readily available and accessible.
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