Until the end of last year, cyptocurrencies weren't even recognised as an official form currency by Australian authorities. Now, the ATO is working out how to make sure investors and traders aren't dodging their taxation responsibilities.
Fear, Uncertainty and Doubt. These three words are the bane of Bitcoiners' existence. Cryptocurrency enthusiasts use the acronym FUD to describe any negativity that might be swirling around the market that causes prices to drop. And the FUD was strong this week, when the whole cryptocurrency ecosphere got fucked.
The ATO confirmed it is conducting external consultations to get this right, workshopping solutions with tex eperts, lawyers and tech, banking and finance experts next month - a move that the departments says will "help inform the ATO’s strategy for supporting the community in understanding their tax obligations, including any further advice and guidance required to improve the client experience."
"The creation, trade and use of cryptocurrencies is a rapidly evolving area. The ATO is continuing to work proactively both domestically and internationally to identify and respond to any issues related to the tax implications of cryptocurrencies, whether as a result of new types of transactions, new structures or new participants entering the increasingly digitised environment," an ATO spokesperson said.
So what do you need to do? Keep details and evidence of all your cryptocurrency transactions - the amounts in Australian dollars, what you traded, when and who to.
The ATO says there won't be income tax or GST implications "if you are not in business or carrying on an enterprise and you simply pay for goods or services in Bitcoin [or other cryptocurrency]."
"Where you use bitcoin to purchase goods or services for personal use or consumption, any capital gain or loss from disposal of the bitcoin will be disregarded provided the cost of the [cryptocurrency] is $10,000 or less."
There have already been major changes to the way Australia deals with crytopcurrencies, making them answerable to Austrac (which means they have the same reporting and regualtory obligations as the major banks). Laws were passed last year to remove double taxation, and amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act were also made.