This 2022 tax season, ATO is on the lookout for cryptocurrency investors. So if you are one, we highly recommend that you be well informed on the commonly misunderstood tax assumptions concerning crypto profits. With this initiative, you could save yourself from possible hefty penalties.
ATO’s attention to crypto profits this tax season is mainly influenced by the evident growth of Aussies dipping their toes into it this past financial year. Although this regulation can bring you several things to be excited about, you must ensure to stay on top of all tax concerns you might be entangled with first.
To help you with that, we prepared you easy-to-digest FAQs below. Here we go:
Can the ATO see my cryptocurrency holdings?
Yes. Since ATO has access to Australian data exchanges that match information with personal tax returns, they can see your holdings. Hence, it is in your best interest to honestly report all necessary crypto transactions in your tax return.
What’s the difference between being a crypto trader and a crypto investor?
In a nutshell, you are a trader if you buy and sell crypto over the short term to make profits. However, you are classified as an investor if you purchase crypto for the future and plan to buy it and hold it for long-term gain.
How should you pay tax if you are a crypto trader? What if you are a crypto investor?
If you are a trader, you must list your profits as business income and pay income tax accordingly. But if you’re an investor, you’ll need to pay capital gains tax on any profits from selling crypto.
Should your situation involve complications not mentioned, we suggest you ask for the professional help of your trusted tax agent – given that your tax agent is experienced and up to date with crypto tax changes.
