It’s all happening in the exciting world of crypto… er, taxation. The ATO has taken note of the recent market plunge, while the Portuguese government has finally decided it wants its slice.
Okay, we lied. It’s not all happening.
The ATO is watching you. Even in the metaverse. (Put some clothes on)
With the end of the Aussie financial year looming, amid the Terra/UST-induced crypto cataclysm, the Australian Taxation Office has seen fit this week to publish a reminder/warning to cryptocurrency investors about their responsibilities.
The ATO mainly wants you to remember that its guidelines decree that capital gains and losses must be reported every time a digital asset is sold.
And that includes that crappy jpeg of a cartoon squid you* sold for an 85% loss, after attempting to catch on to both the Bored Ape Yacht Club hype and Squid Game mania. (Plus those dog-themed cryptos you* also aped into about six months too late as well.)
In the statement, ATO Assistant Commissioner Tim Loh said that “crypto losses can’t be offset” against an investor’s salary or wages, adding that the taxation department expects to see “more capital gains or capital losses reported in tax returns this year”.
Loh indicated that the ATO is well aware, through its data collection processes, that “many Aussies” are buying, selling and trading crypto. In fact, it estimates that approximately 500,000 to 1 million Australians now own some form of cryptocurrency. (And nope, not just that free Smith’s Chips NFT, either.)
Three of the main things to remember under current ATO crypto guidelines:
• Australian citizens are not required to pay tax when purchasing cryptos, but ONLY if the purchase is made with fiat currencies (Aussie dollars, US dollars, British pounds etc). Trading crypto to crypto, though? That’s a taxable event.
• The percentage of capital gains tax you’ll pay if you’re buying crypto as an individual investor is the same as your income tax rate.
• Investors can get a 50 per cent reduction in CGT on an an asset if it’s held for one year or more after purchase. Guess it pays to be a HODLer sometimes… unless you’re holding bags of sh*tcoins, that is. Or LUNA.
Hang on, can I no longer be a legit crypto-tax dodger in Portugal?
In a major bummer for tactically tax-savvy crypto nomads, Portugal’s Finance Minister Fernando “Funky Cold” Medina** has confirmed the country plans to apply capital gains taxes on all crypto profits.
Cryptocurrencies have been subject to virtually no tax rules in the Iberian nation since 2016, and that’s largely been on the grounds that they are not considered legal tender.
No specific date for this has yet been confirmed, but the plan was reportedly seconded by Secretary of State for Tax Affairs António Mendonça Mendes late last week, according to Sapo, a Portuguese news outlet.
If NFT head and Lisbon resident “Jorge” is correct, though, local crypto investors will probably have a bit of time to figure out if they can stand living tax-free in Dubai instead…
Minister Medina reportedly said that he personally plans to prioritise “justice” and “efficiency”, to ensure that taxation is “adequate” while not being so high as to drive capital out of the region.
“It is an area in which there is a lot more knowledge and a lot more progress so that Portugal can drink from international experiences”, said Funky Cold**.
**May or may not be Minister Medina’s actual nickname. Probably should be, though.