As defined by the ATO, cryptocurrency is…
“used to describe a digital asset in which encryption techniques are used to regulate the generation of additional units and verify transactions on a blockchain. Cryptocurrency generally operates independently of a central bank, central authority or government.”
But what does that mean for individuals or businesses using the currency that the media has learned to love and talk about? You might think that because of the online and peer-to-peer nature of it, that governments are unaware of your stash but it won’t last long. The ATO has already started ramping up data-matching services to target unexplained assets and wealth such as cryptocurrencies like Bitcoin and Litecoin.
So if you had the foresight to have made money out of investing in the cryptocurrency before the boom you need to be aware of the capital gains tax implications. If you have gone even further and have a business that transacts with cryptocurrency, did you know that trading stock rules not capital gains tax rules apply? If you’ve failed to mention your crypto wealth to the ATO, get in touch so we can provide advice on what to do next.