Australian Tax Office announced that it will prompt around 300,000 Crypto and NFT holders to report capital gains. The agency compares individual tax returns against data from crypto service providers (OTC desks and exchanges). This aims to ensure that individuals are paying the right amount of tax.
The mandate is retroactive. The agency will send out additional 100,000 letters to request citizens to review previous tax filings.
Australian Tax Office recognizes substantial Crypto and NFT Gains
The agency firmly asserts that holders face capital gains taxes when they exchange one cryptocurrency for another. Crypto and NFT holdings converted to Australian dollars are also taxable.
Most agree that the crypto market is currently in the midst of another bull run. NFTs are exploding as well with $2 billion Gross Sales representing about 2,100% increase from Q4 2020. Crypto and NFT holders are benefiting from the new all time highs and record breaking sales. Hence, the agency noticed the dramatic increase in crypto and NFT trading activities of its citizens. More than 600,000 of its 25 Million citizens have digital assets.
Regulators at odds with Innovators
The Crypto space is often at odds with regulators because it is still an evolving industry. In effect, existing laws does not cover Crypto and NFTs in general. To help Crypto and NFT holders navigate the new rules, Australian Tax Office created a fact sheet containing useful tips and guidelines.
Cryptocurrency is entirely anonymous. However, it is completely transparent and trackable. The Australian Tax Office maintains that anonymity is not a license to ignore tax obligations. One thing’s for sure, reconciling innovation and regulation will further encourage growth in the industry.