ATO says BITCOIN is not money – it is….

The term cryptocurrency is generally used to describe a digital asset in which encryption techniques are used to regulate the generation of additional units and verify transactions on the blockchain.

Cryptocurrency generally operates independently of a central bank, central authority or government. Bitcoin is one example of cryptocurrency.

The ATO has released a guidance paper that focuses on the tax consequences for taxpayers transacting with cryptocurrencies. It states that their current view is that Bitcoin is neither money nor Australian or foreign currency.

The ATO states it is property and is an asset for capital gains tax (CGT) purposes.

The guidance paper further states that other cryptocurrencies that have the same characteristics as Bitcoin will also be assets for CGT purposes and will be treated similarly for tax purposes.

We advise all clients involved in acquiring or disposing of cryptocurrency of the need to keep detailed records in relation to your transactions, especially:

  • the date of the transactions;
  • the value of the cryptocurrency in Australian dollars at the time of the transaction (which can be taken from a reputable online exchange);
  • what the transaction was for and who the other party was (even if it’s just their cryptocurrency address).

We caution that as cryptocurrency is a new and fast growing area, the ATO may vary their position in the future. we remind you that substantiation, as always, will be key to good relations with the ATO.

If you are unsure of your tax obligations regarding cryptocurrency, call us on 3822 7201.

For further information from the ATO CLICK HERE