Did You Buy Crypto This Year? Here’s What You Need to Know at Tax Time
Cryptocurrency has become a popular investment for many Australians, but it’s also one of the most misunderstood areas of tax. Many investors assume tax only applies when they convert their crypto back into cash. Unfortunately, that’s not always the case.
More Transactions Can Trigger Tax
Depending on your circumstances, a capital gains tax event may occur when you:
- Sell cryptocurrency.
- Swap one cryptocurrency for another.
- Use cryptocurrency to purchase goods or services.
- Gift cryptocurrency to someone else.
Even if no Australian dollars change hands, a taxable event may still occur.
Don’t Forget Staking Rewards
If you’ve earned staking rewards or received cryptocurrency through certain activities, those amounts may also have tax implications. The tax treatment will depend on how the income was earned and how you hold your investments.
Record-Keeping is Essential
Crypto exchanges don’t always provide everything you need for tax purposes. Keeping detailed records of your transactions, including purchase dates, sale dates, values and fees, will make preparing your tax return significantly easier.
Avoid Surprises
The ATO continues to expand its data matching capabilities and receives information from a range of cryptocurrency service providers. If you’ve invested in crypto during the year, it’s worth reviewing your transactions before lodging your tax return to ensure everything has been reported correctly.
Whether you’ve made a profit, a loss or simply aren’t sure what needs to be declared, the Simmons Livingstone team can help you understand your crypto tax obligations. Call 1800 618 800 or email admin@simmonslivingstone.com.au.
