Australian Taxation Office issues capital gains warning for crypto and NFT sellers

Headed to the moon in the midst of a crash? The tax man would like to take his share.
Written by Chris Duckett, Contributor
Image: Pigprox -- Shutterstock

The Australian Taxation Office (ATO) has issued its four priorities for the upcoming tax season, with capital gains from crypto and work-related expenses being listed.

On the crypto front, simply because you managed to make money before last week's crash hit off a decentralised system, does not mean the tax office is not owed something, much like selling property or shares, selling crypto or NFTs can mean tax is due.

"Crypto is a popular type of asset and we expect to see more capital gains or capital losses reported in tax returns this year. Remember you can't offset your crypto losses against your salary and wages," ATO assistant commissioner Tim Loh said.

"Through our data collection processes, we know that many Aussies are buying, selling or exchanging digital coins and assets so it's important people understand what this means for their tax obligations."

Last year, the ATO said over 600,000 taxpayers invested in digital assets in recent years.

"The innovative and complex nature of cryptocurrencies can lead to a genuine lack of awareness of the tax obligations associated with these activities," the ATO said at the time. "Also, the pseudonymous nature of cryptocurrencies may make it attractive to those seeking to avoid their taxation obligations."

The tax office added it had been collecting cryptocurrency transactions from Australian-based cryptocurrency exchanges dating back to the 2014-15 tax year for the purposes of data matching.

The ATO also said on Monday it would be looking at work-related expenses related to working from home.

"Some people have changed to a hybrid working environment since the start of the pandemic, which saw one in three Aussies claiming working from home expenses in their tax return last year. If you have continued to work from home, we would expect to see a corresponding reduction in car, clothing and other work-related expenses such as parking and tolls," Loh added.

"If your working arrangements have changed, don't just copy and paste your prior year's claims. If your expense was used for both work-related and private use, you can only claim the work-related portion of the expense. For example, you can't claim 100% of mobile phone expenses if you use your mobile phone to ring mum and dad."

While much of the information Australians need to complete their tax returns is pre-filled these days, it's not as simple as logging into myTax and punching a button.

"While we receive and match a lot of information on rental income, foreign sourced income, and capital gains events involving shares, crypto assets, or property, we don't pre-fill all of that information for you," Loh said.

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