Australian Stock Markets
Regulators are playing catch-up when it comes to the brave new evolving world of cryptocurrencies.
The Australian Taxation Office believes bitcoin, ripple, ethereum and hundreds of other digital currencies are "a form of property".
What bitcoin says about us
"Any financial gains made from the selling of bitcoin will generally be subject to capital gains tax (CGT) and must be reported to the ATO," a spokesperson from the tax office said.
But this remains a grey area that is yet to be tested in a court of law.
Until that happens, the ATO has advised cryptocurrency owners to keep good records of their intentions, transactions, and who received payments.
It might be wise to heed that advice, given the tax office has warned it will be looking out for tell-tale signs of crypto tax dodgers living beyond their means.
"The ATO is here to help those that are genuinely trying to meet their tax obligations," the spokesperson said.
This includes using "a range of existing powers" which are used to address "unexplained wealth and conspicuous consumption that may arise through profits derived from cryptocurrency investment".
Beware crypto taxes
One of Australia's leading tax experts has warned that many investors mistakenly think their cryptocurrency profits are tax-free.
This means the gains they make from investing in cryptocurrencies may be taxed fully as income — rather than capital gains — so they will miss out on the tax discount after holding the currencies for more than a year.
Some tax experts believe at least 90 per cent of people who claim to be "cryptocurrency investors" are really speculators, even if they have held the asset for more than 12 months.
The crypto revolutionOnce the preserve of criminals, cryptocurrencies have become the vehicle of choice for speculators and dissidents.
Their rise in popularity has largely been due to people's "fear of missing out" (when one sees their friends and neighbours investing and making huge gains).
Another reason is their mistrust and hostility towards the traditional banking system.
So having the option of using a currency that is not affected by the government is a good thing."Too much of a good thing it seems for governments to remain on the sidelines.
This means the gains they make from investing in cryptocurrencies may be taxed fully as income — rather than capital gains — so they will miss out on the tax discount after holding the currencies for more than a year.
Some tax experts believe at least 90 per cent of people who claim to be "cryptocurrency investors" are really speculators, even if they have held the asset for more than 12 months.
The crypto revolutionOnce the preserve of criminals, cryptocurrencies have become the vehicle of choice for speculators and dissidents.
Their rise in popularity has largely been due to people's "fear of missing out" (when one sees their friends and neighbours investing and making huge gains).
Another reason is their mistrust and hostility towards the traditional banking system.
So having the option of using a currency that is not affected by the government is a good thing."Too much of a good thing it seems for governments to remain on the sidelines.
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