Australianbiz Accountants Q & A Forum

The correct tax treatment of crypto transactions is a question of fact which should not be driven by tax outcomes – crypto transactions call fall into 3 categories:

1. On capital account which is the ATO’s preferred method; or
2. As a business of crypto trading in which case trading stock also needs to be accounted for; or
3. On revenue account not from the conduct of a business in line with the Myer Emporium principle

Tax agents can’t rely solely on the reports provided by external organisations to determine the correct tax treatment particularly where these reports treat crypto losses on revenue account.

Most clients who have incurred large crypto losses will want to claim these losses as a deduction against their other income, but this requires a detailed analysis of the facts to ensure the correct disclosure is made.

The ATO will no doubt be flagging crypto losses that have been claimed by taxpayers against other income, so many taxpayers will have adjustments made to their returns where the disclosure has not been correctly made.

Tax Agents have a responsibility to ensure that tax returns have been correctly prepared, so agents will be in the firing line (not only from their clients) for incorrectly disclosing crypto transactions on tax returns.