Australian crypto investors have been warned by the authorities not to forget their tax obligations when selling digital assets.
In a release setting out its priority areas, the Australian Taxation Office (ATO) reminded consumers that selling a token can attract capital gains tax, just as it would for the sale of property, shares, or another asset.
Taxes on the sales of digital tokens, including non-fungible tokens (NFTs), were identified as one of the areas where the taxman is frequently seeing errors.
“Through our data collection processes, we know that many Aussies are buying, selling or exchanging digital coins and assets so it’s important people understand what this means for their tax obligations,” said ATO assistant commissioner Tim Loh.
At a time when many cryptocurrencies have taken a hit amid the fallout of Terra’s collapse, Loh also had a stark reminder for those offloading digital assets for less than they originally paid.
“Remember you can’t offset your crypto losses against your salary and wages,” he said.
According to the ATO’s guidelines, recording a net capital loss can mean the taxpayer is entitled to a reduction on future capital gains, but not on any of their other income.
The ATO also emphasized in its latest release that NFTs are included in the range of assets on which taxpayers must be aware and are subject to capital gains tax if sold for a profit.
In February, the tax authority set out its stance on NFTs, saying their treatment would follow the same general principles as cryptocurrencies. Crypto in Australia
Over 800,000 Australians have owned a form of crypto, the country’s Treasurer Josh Frydenberg said last year.
The Government has promised to bring the sector “out of the shadows” with a “world-leading” regulatory framework.
A consultation was launched in March of this year, as lawmakers seek to introduce a licensing system for crypto exchanges. Responses can be submitted until 27 May.
Still, crypto has faced its fair share of criticism down under, with one senator calling decentralized autonomous organizations (DAOs) an “existential threat” to the taxbase earlier this year, while concerns have also been raised about the uptick of crypto’s use in investment scams.