The Australian Tax Office is warning would-be cryptocurrency and NFT millionaires that any gains they have made off the booming digital revolution must have tax paid on it.

Therefore, if you exchanged cryptocurrency for goods, cash or other cryptocurrencies then this is normally considered a disposal for the purposes of capital gains tax, and you may need to include a capital gain or loss in your income tax return.

 

Make tax time easier by remembering these three tips:

 

You must report a disposal of cryptocurrency for capital gains tax purposes if you either:

■ exchange one cryptocurrency for another cryptocurrency

■ trade, sell or gift cryptocurrency

■ convert cryptocurrency to a fiat currency, for example to Australian dollars (AUD).

 

A capital gain or loss is the difference between your:

■ cost base (cost of ownership – including the purchase price of the coin plus certain other costs associated with acquiring, holding and disposing of it), and

■ capital proceeds (what you receive or the market value of what you receive) when you dispose of your cryptocurrency.

 

You need to keep records of all your transactions associated with acquiring, holding and disposing of cryptocurrency. You will need to keep records for five years after you dispose of cryptocurrency. 

 

Source: ATO