The ATO is chasing taxpayers yet to report on their crypto activities – don’t be left as a target here.
Cryptocurrency has become normalised to the point where Bitcoin ATMs are available in most Australian capital cities. The ATO estimates there are over 600,000 taxpayers that have invested in crypto-assets in recent years and it’s an area of keen interest to them.
If your business accepts cryptocurrency as payment for goods or services, these payments are treated in the same way as any other. That is, if your business is registered for GST, the price paid by the person paying in the digital currency should include GST. Likewise, if you purchase goods or services for use in your business then you should generally be able to claim GST credits on the transaction in your activity statement, even if you used digital currency to make the purchase.
If you are in the business of trading cryptocurrencies and your business is registered for GST, you would generally charge GST on the exchange of the currency and claim the GST credits in your activity statement. While the GST rules have been updated to ensure that a GST liability doesn’t apply to the provision of cryptocurrency for goods or services, the rules don’t prevent GST from applying to the supply of cryptocurrencies in exchange for a payment of money or digital currency.
It is also possible that someone could hold cryptocurrency as trading stock if it is held for the purpose of sale or exchange in the ordinary course of a business. Any gains from the trades are then taxed in the business’s income tax return. CGT concessions and exemptions are not generally available in this case. If you are in the business of trading cryptocurrencies, that is, you approach the trading in a business-like manner, then you can generally claim losses and other business expenses.
The tax laws can be complex in this area and it’s important to ensure that you get the right advice.
It’s important to keep records of your cryptocurrency exchanges. The ATO regularly runs data matching projects, and has access to the data from many crypto platforms and banks.