The Australian Taxation Office (ATO) wants to remind you that just because you no longer have cryptocurrency, it doesn’t mean you won’t get taxed on it come tax time. That also means the cash generated from the selling of an NFT is subject to tax – that of course assumes you make any money from palming off a .jpg to another sucker.
The ATO has made this nascent internet coin a priority for a few years now, last year updating tax time guidance that it’s spruiking again for 2022-23.
“Capital gains from the disposal of assets, including crypto assets, continues to be a priority this tax time,” an ATO spokesperson told Gizmodo Australia. “The tax treatment of crypto assets remains unchanged.”
“There’s more to investing in crypto assets than just what you buy and sell. You also need to understand your tax obligations,” it says in a crypto toolkit.
To put it simply: The ATO doesn’t discriminate between the Aussie dollar and your internet coin.
If you dispose of an asset such as property, shares, or a crypto asset, including non-fungible tokens (NFTs) this financial year, you will need to calculate a capital gain or capital loss and record it in your tax return.
A capital what-now? Generally, a capital gain or capital loss is the difference between what an asset cost you and what you receive when you dispose of it. In this context, a capital gains tax (CGT) event occurs when you dispose of your cryptocurrency. A disposal can occur when you: sell or gift crypto, trade or exchange crypto, convert crypto to a fiat currency or use crypto to buy goods or services.
The ATO said that if you make a capital gain on the disposal of cryptocurrency, some or all of the gain may be taxed. In something bound to piss off anyone with non-real coin, to abide by Australia’s tax rules, you need to know the value of your cryptocurrency asset to determine if you make a capital gain or capital loss on the CGT event happening. That’s its Aussie Dollar value.
The ATO said the tax consequences vary depending on the nature of your circumstances. However, it said everybody involved in acquiring or disposing of cryptocurrency needs to keep records in relation to their cryptocurrency transactions. You’re doing this anyway for everything else (smile and nod). On top of this, it highlights that if you have transacted with a foreign cryptocurrency exchange you may have tax responsibilities in another country, not just Australia.
For those of you wondering how the ATO will know you flogged your coin back in January, it’s actually had a data-matching program in place since 2019.
This article has been updated since it was first published.