The Australian Tax Office has recently gone on record to remind crypto traders that they are expected to declare their digital profits on their taxes. The tax office also clarified that these virtual assets are treated as property in Australia and not as currency. Therefore, any money earned through the sale of cryptocurrency is subject to capital gains tax. It was also made explicitly clear that the capital gains tax will be applied to any profits earned through the sale of cryptocurrency after July 2017.
Also made clear in its statement was the fact that taxpayers are potentially eligible for a 50 percent discount on their capital gains tax. The condition that needs to be met is that one must be an Australian taxpayer who has had virtual currency in their possession for over a year without selling or spending it.
The market for cryptocurrency itself has been on the decline for most of 2018. While the year started off looking hopeful, with the market cap reaching extremely high levels at $800 billion, the market has been on a steady decline with the current value being around $120 billion. This is likely going to lead to many taxpayers declaring losses, though this can be a helpful way to reduce tax liability.
The Australian Tax Office has also been putting in more effort to make cryptocurrency trading a more transparent process. Hence, it has decided to implement measures such as Know Your Customer or KYC. This makes it mandatory for traders to verify their customers and confirm their identity. Additionally, traders are expected to report to the appropriate authorities if they stumble across any shady transactions that go over the permitted limit of AU $10,000.
Another new measure put in place for similar reasons requires the registration of cryptocurrency exchanges with the AUSTRAC or the Australian Transaction Reports and Analysis Centre.
These changes have been introduced as part of a campaign initiated by the Australian Tax Office in order to reduce the risk of money laundering through cryptocurrency trading.