The Australian Tax Office (ATO) recently reissued a warning in which it tells that Australian’s cryptocurrency traders have to declare their crypto trading gains during annual revenue reporting. According to Lifehacker Liz Russell, a senior tax agent at Etax.com.au said that it’s important for traders to understand that ATO sees cryptocurrencies as property and not currencies. This gains made from selling crypto are included as capital gains tax which also applies to real estate and shares. ATO clarified that if the cryptocurrency is held for over a year then the Australian taxpayer who holds it might get50% discount on the capital gains tax.
For example, if you buy $5000 worth of XEM and traded it for fiat currencies worth of $ 8500 then the profit made is known as capital gain. It will be added with the accessible income of the year. According to Russell, the ATO is “doubling down with its data matching technology to ensure that cryptocurrency traders pay taxed related to their gains but the crypto asset less than $10,000 are considered as an asset for enjoyment or personal use. The year 2018 is where crypto market saw a decline with BTC as the flagship cryptocurrency that is going to near $20,000 all-time high to $3,200 low before starting it to recover
Russell noted that some may end up having to declare losses which might help them reduce tax liability and the tax agent was quoted as a saying
For instance, if the loss is made for $3,000 on the scale of cryptocurrency but there is a gain of $4,000 on the sale of shares which means that the net capital gain would be $4000 which would gain minus in the $3000 with a loss equaling to a capital gain of $1000.
ATO to Enforce KYC while Eyeing Crypto-Trading Gains
The ATO is making it mandatory for cryptocurrency exchanges operating in Australia just to verify the identity of their customers and also to report a suspicious transaction which goes up to AUD $10,000 limit.
Per Lifehacker’s report, an ATO spokesperson was quoted as saying:
As there is no specific label regarding the capital gains schedule or the income tax return to find out the number of investments in cryptocurrency were they are still looking for lodgement activity for this year to determine the significant impact of cryptocurrencies.
The spokesperson added, however, that through its advice and community channel areas it has received an “increase in questions relating to tax obligations of cryptocurrency activity.” Per the spokesperson, the tax agency sees this as a “positive in people wanting to do the right thing in meeting their obligations.”