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The ATO has re-issued warnings to cryptocurrency traders, reminding them that it will closely monitor their earnings statements. If you have cashed a manna and you have not declared it, be careful.
ATO now considers cryptocurrency as a resource that must be declared. And if you're going to hide your earnings, be careful. The tax man has a way to find out what encryption you have and if you are hiding money.
"It is important to know how ATO classifies the cryptocurrency, as this determines how it is treated for tax purposes," said Liz Russell, senior tax agent at Etax.com.au.
He stated that cryptocurrency is considered an asset and subject to the same provisions on capital gains tax (CGT) applicable to properties and shares.
"Suppose you originally purchased $ 5,000 of XEMs. If you later traded it with a fiat currency of $ 8,500, the profit of $ 3,500 is considered a capital gain and you will have to add it to your taxable income for financial year – much like any profit you make the sale of shares or an investment property, "he explained.
Regardless of whether the cryptocurrency is distributed in whole or in part, Australians are required to pay taxes on any surplus value when they negotiate cryptocurrency.
Many traders love the anonymity offered by cryptocurrency trading, but ATO can check what is happening by looking at hundreds of data sources. So declaring a modest income after buying a new home and a Lamborghini in cash may not be a smart move if you're trying to hide some crypts. Russell added that ATO is doubling its data matching technology to ensure that we pay the required fees related to cryptocurrency trading.
Given the cryptocurrency, the markets have crumbled like crazy in the last two weeks, with most major currencies losing about 20 percent in value only in the last week, some people out there are likely to report losses . In this case, you may be able to reduce tax liability.
"For example, if you made a loss of $ 3,000 on the sale of cryptocurrency but a gain of $ 4,000 on the sale of shares, your net gain would be the gain of $ 4,000 minus the loss of $ 3,000, equivalent to a capital gain of $ 1,000, "explained Russel.
Of course, part of the confusion comes from the fact that you can use cryptocurrencies to buy goods. In this case, if you purchase items from profits, now there is CGT.
This story has been updated from its original publication.
