On May 16, 2022, the Australian Tax Office issued a publication that identified four key focus areas for the 2021-22 tax year. These four are areas where the ATO says they see people making mistakes. One of the areas is capital gains from crypto assets. The ATO plans to ensure that there is an appropriate level of scrutiny on correct reporting of deductions and income for the priority areas.
The ATO warned that taxpayers who dispose of crypto assets need to calculate a capital gain or capital loss and record it in their tax return. As with other capital assets, gain or loss is generally the difference between what an asset costs and what is received when it is disposed of.
Recognizing the recent volatility in the crypto markets, the ATO said that it expects to see more capital gains or capital losses reported in tax returns this year. The percentage owed to the ATO varies between income brackets and duration of ownership, but in general, the rate is reduced for assets held longer than 12 months. The ATO reminded taxpayers that crypto losses cannot be offset against salary and wages.
