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· Posted on
February 21, 2024

The ATO is putting crypto profits under the tax microscope

We dig into whether the ATO actually tax you for buying and selling crypto

What's the key learning?

  • People are taxed on their profits, called 'Capital Gains'
  • The ATO has classifed crypto as an asset
  • If profit is made on crypto it is seen as 'Capital Gains'
  • If you have bought crypto but not sold it, you will not be taxed
  • This ruling by the ATO is a grey area because it has not been tested in a court of law

THEY CAN TAX ME FOR MY CRYPTO EARNINGS?

The Australian Tax Office has come out swinging, saying it is coming after crypto investors this financial year.

The crypto market has enjoyed gigantic rises in value in 2021 - and 44% of Aussie millennials are now dabbling in the crypto market.

One of the main drawcards of cryptocurrency is the anonymity of ownership - so it will be interesting to see how the government finds out who owns what and if people will take on the ATO and try hide its earnings.

So, what is the key learning?

The ATO is classifying digital currency (such as crypto) as an asset, like shares or a house. Therefore, if crypto is sold at a profit, it is subject to a tax law named 'Capital Gains Tax'.

While the ATO has made its decision re crypto taxes, it still remains a grey area because nobody has tested the ATO's ruling in a court of law.

If you just buy and HOLD ON FOR DEAR LIFE, then you don’t need to pay tax on your crypto, even if the value of your portfolio increases (or decreases) significantly.

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