During March 2020 the Australian Taxation Office (ATO) announced that it will increase audit program and data matching on the investment of Cryptocurrency and Non Fungible Tokens (NFT).
The ATO does not view cryptocurrency as foreign currency. Instead, for most investors it is taken to be property and therefore a CGT asset for tax purposes. This view is also extended to NFT investments.
Capital gain or loss made from cryptocurrency or NFT is measured at the time of their disposal. Disposal is an event whereby you relinquish control of the asset which may also include when one currency is exchanged for another currency, in this case you are taken to dispose of one currency while simultaneously acquiring another in the form of the exchanged asset.
In order to accurately measure the gain or loss you need to know and keep records of the assets’ market value in Australian Dollars at the time of disposal. While the calculation is straightforward, the major issue lies on the fact that due to the tendency of large trading volume, spreadsheets and data you can download from your e-wallets or cryptocurrency exchanges may not be complete nor provide you with the relevant details needed.
Prior to engaging in the trading of these types of assets, it may be worth signing up to third party service providers such as Koinly (https://koinly.io/) , Crytotaxcalculator (https://cryptotaxcalculator.io/au/) or Coin Tracker (https://www.cointracker.io/ ) that have data capturing abilities specifically for the purpose of taxation.
The ATO started collecting records from various cryptocurrency service providers in May 2019. These providers include anything from cryptocurrency exchanges, payment facilitators, brokerage services and more. They also have a data matching program with Australian exchanges.
The type of information collected include your name, address, ABN, date of birth, driver license information and contact details, amongst other personal information. The ATO is also able to access transaction and bank account details, associated wallets and more.
Contributed by our ace Helene