Market volatility has seen the prices of many cryptocurrencies and shares pull back from the record highs of 2021-22.
That said, many investors have locked in substantial capital gains by disposing of assets during the financial year. Others have booked capital losses.
The ATO expects a surge in capital gains and losses on crypto assets, including non-fungible tokens.
“Through our data collection processes, we know many Aussies are buying, selling, or exchanging digital coins and assets, so it’s important people understand what this means for their tax obligations,” the ATO says.
CPA Australia’s Senior Manager Tax Policy, Elinor Kasapidis, says practitioners have a key role in the process.
“As one in five Australians are estimated to hold crypto assets, it’s important to ask clients whether they have digital or crypto assets, whether they’ve disposed of them, or even if they’ve used them to buy something which, for example, can be a taxable event,” Kasapidis says.
“It’s about making sure clients have the information they need to calculate any capital gains tax [CGT] and ensuring taxpayers understand when they’re going to have to pay tax, which can be more often than they think.”
According to Kasapidis, exchanging one digital currency for another can be taxable. There are also rules around donating crypto assets.
She says practitioners can use online services to see where trading in investment assets has been data matched by the ATO.
“Certainly, if you see something that’s been data matched that the client is not talking about, then you need to ask.”
The ATO has also outlined rules around claiming a deduction from the donation of crypto assets to organisations that have the status of being a deductible gift recipient.
“Because crypto assets are property, if your clients donate crypto assets there may be CGT consequences,” the ATO says.
“Donating crypto assets is a CGT event, similar to the disposal of any other asset.”