The ATO has released updated information on the issue of claiming cryptocurrency (crypto) losses and gains in your tax return.

Firstly, gains and losses from crypto are only reported in your tax return when you dispose of it. Disposing of your crypto can include selling it, converting it to fiat currency, exchanging it for another type of asset or buying something with it. As a result, you cannot recognise market fluctuations or claim a loss because the value of your crypto assets change until the loss is realised or crystallised.

Note: Gains and losses from the disposal of cryptocurrency should be reported in your tax return in the financial year that the disposal occurred.

If you made a capital gain on crypto that was held as an investment and you held the crypto for more than 12 months then you may be able to access the 50% Capital Gains Tax (CGT) discount and halve the tax you pay.

If you made a loss on the crypto (capital loss) when you disposed of it, you can generally offset the loss against any capital gains that you might have (unless the crypto is a personal use asset). But, you can only offset capital losses against capital gains. You cannot offset these losses against other forms of income like salary and wages. If you don’t have any capital gains to offset, you can hold the losses and carry them forward for another future year when you can use them.

If you earned income from crypto such as airdrops or staking rewards, then these also need to be reported in your tax return.

And remember, it is so important to keep records of your cryptocurrency transactions. The ATO has sophisticated data matching programs in place and cryptocurrency reporting is a major area of focus.

When working with Capital Gains Tax and Cryptocurrency, you should always contact a qualified accountant for individual advice.

That’s where we come in – our team at Aintree Group has experience in these fields, so get in touch today and we can help!