The Australian Taxation Office (ATO) is concerned that many taxpayers believe their cryptocurrency gains are tax free or only taxable when the holdings are cashed back into Australian dollars.
ATO data analysis shows a dramatic increase in trading since the beginning of 2020. It is estimated that there are over 600,000 taxpayers that have invested in crypto-assets in recent years.
Last year, the ATO directly contacted around 100,000 taxpayers who had traded in cryptocurrency and prompted 140,000 taxpayers at lodgement.
The ATO matches data from cryptocurrency designated service providers to individuals’ tax returns, helping us ensure investors are paying the right amount of tax.
Businesses or sole traders that are paid cryptocurrency for goods or services, will have these payments taxed as income based on the value of the cryptocurrency in Australian dollars.
The ATO have created a cryptocurrency factsheet with tips and information on how capital gains tax applies to cryptocurrency
https://iorder.com.au/publication/publicationdetails.aspx?pid=75362-04.2021
Information on what to watch out for when making cryptocurrency investments is available on ASIC’s MoneySmart website
https://moneysmart.gov.au/investment-warnings/cryptocurrencies-and-icos
More information for taxpayers can be found on the ATO website.