“… you cannot offset your crypto losses against your salary and wages,” says Assistant commissioner Tim Loh.
ATO Mentions NFTs as Assets, Calls for Crypto-Related Capital Gains/Losses Reporting
The Australian Taxation Office (ATO) has listed its crypto capital gains as one of the four main areas of target in 2022.
A capital gain or loss is the price difference between the time of an asset purchase and sale. The percentage that is owed to the Australian Taxation Office (ATO) depends on the income bracket over the period of ownership, but the rate is reduced for assets that are held over periods of more than 12 months.
ATO, which has been at the frontline warning crypto investors about cryptos, appears to be softening its stand. It has now mentioned non-fungible tokens as one of the asset classes that will be closely scrutinized to ensure there is correct tax reporting.
In the announcement on Monday, in addition to capital gains from crypto-related assets, shares, and properties, ATO indicated it would focus on record-keeping, rental property, and work-related expenses.
With the price of many crypto assets plummeting in 2022, ATO was quick to point out that the sale of any crypto asset, including NFTs, should come with a well-calculated capital gain/loss. The office added that those who falsify the information would face penalties.
According to Tim Loh, the taxation body already has a good idea of people’s investment activity, but he also called for due diligence to avoid incurring penalties. He also noted that the number of crypto investors has shot up, and some of them might not be aware of the reporting methods. Here is what he had to say:
“Crypto is a popular type of asset, and we expect to see more capital gains or losses reported in tax returns this year. Remember, you cannot offset your crypto losses against your salary or wages.”
According to Loh, ATO knows people are buying and selling cryptos, and it is important for them to understand the implications on their tax obligations.