Australia: Guidance regarding tax treatment of cryptoassets

Information to help taxpayers understand their tax obligations with regard to cryptoassets

Information to help taxpayers understand their tax obligations with regard to cryptoassets

The Australian Taxation Office (ATO) on 13 July 2022 published guidance with information to help taxpayers understand their tax obligations with regard to cryptoassets.

According to the ATO guidance, cryptoassets are considered to be an asset for capital gains tax purposes, and must be reported when disposed of by means of:

  • Trading, selling or gifting crypto
  • Exchanging one cryptoasset for another
  • Converting crypto to a fiat currency, for example to Australian dollar
  • Using crypto to obtain goods or services

The ATO guidance advises all holders of cryptoassets that they need to keep records of their cryptoasset transactions (such as disposing of a cryptoasset resulting in a capital loss or a capital gain that must be included in their tax returns). A capital loss can only be made when a cryptoasset is disposed of and must be reported in the year it occurred. Paper losses on cryptoassets cannot be claimed as a capital loss. Further, cryptoasset capital losses cannot be offset against other income, such as salary or wages, but can be used to offset against capital gains from the current, or future, financial years. 

Other income derived from cryptoassets, such as airdrops or staking rewards, also need to be included in tax returns as “other income.”

If taxpayers hold onto a cryptoasset for 12 months or more, they may be eligible for a 50% capital gains tax discount.

 

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