Every year the ATO focuses on different areas for our individual tax returns, so it’s important you slow down and get up to speed before lodging your tax return. If in doubt, a tax agent can help you navigate the process seamlessly, ensuring you tick all the right boxes. 

The ATO released a statement earlier on 28 May 2021 flagging its concern that many taxpayers believe their cryptocurrency gains are tax free or only taxable when the holdings are cashed back into Australian dollars. 

“This year, we will be writing to around 100,000 taxpayers with cryptocurrency assets explaining their tax obligations and urging them to review their previously lodged returns. We also expect to prompt almost 300,000 taxpayers as they lodge their 2021 tax return to report their cryptocurrency capital gains or losses,” Assistant Commissioner Tim Loh said. 

Capital gains tax and cryptocurrency

Gains from cryptocurrency are similar to gains from other investments, such as shares. The ATO explains that if you’re an investor who buys, sells, or swaps for fiat currency, or exchange one cryptocurrency for another, it will be subject to capital gains tax (CGT) and must be reported. CGT also applies to the disposal of non-fungible tokens (NFTs). 

If you have held a cryptocurrency for at least 12 months as an investment, you may be entitled to a CGT discount if you’ve made a capital gain. 

How to get it right

The ATO’s best tip to nailing your cryptocurrency gains and losses is to keep accurate records including dates of transactions, the value in Australian dollars at the time of the transactions, what the transactions were for, and who the other party was, even if it’s just their wallet address. 

For businesses and sole traders that are paid cryptocurrency for goods or services, these payments will be taxed as income based on the value in Australian dollars. 

The confusion around what you can and can’t do with your cryptocurrency and your tax return is the perfect example of how you could benefit from having Carbon’s tax agents help you to lodge your tax return this year. 

When to lodge your tax return

It’s common for the clock to tick over to July 1 and people rush to try and lodge their tax returns, but it can pay to wait (in some cases, waiting can actually pay off financially). 

The ATO will have all your information loaded by mid-July, meaning that all figures pre-filled will be accurate. You can attempt to lodge your tax return before the information is pre-filled but you will need to manually calculate everything and increase the chance of making an error. We often have clients telling us they started on their own before coming to us. 

Why you should get a tax agent to complete your tax return

If you read this article and thought to yourself that any of it seemed overly complicated and you weren’t sure how it would impact you, then that’s exactly why you need to get help from Carbon’s tax agents. 

If your finances are complex then a tax agent can give you peace of mind knowing the calculations are done accurately, you’ll save time and you’ll know your claims are all legitimate. 

Booking your tax return appointment

If you’re in the Swan Valley or Ellenbrook area, take advantage of our Swan Valley office’s extended hours to get your tax return done at a time that suits you. Their office hours will extend from 19 July until the end of September. 

If you’d prefer to chat with a Carbon tax agent from a different office, simply fill out our contact us form and we’ll be in touch!