Australian Tax Office Tells Crypto Traders to Declare Gains

The Australian Tax Office (ATO) has recently reissued a warning in which it tells Australia’s cryptocurrency traders they have to declare their crypto trading gains when reporting annual revenues.

According to Lifehacker Liz Russell, a senior tax agent at Etax.com.au, said it’s important for traders to understand the ATO sees cryptocurrencies as property and not currencies. This means gains made from selling crypto are to be included as capital gains tax, which also applies to real estate and shares.

The ATO has also clarified that if a cryptocurrency is held for over a year, then the Australian taxpayer who holds it may get a discount of 50% on the capital gains tax. Russell added:

Let’s say you originally bought AUD 5,000 worth of XEM. If you later traded it for fiat currency of AUD 8,500, then the AUD 3,500 in profit is considered a capital gain, and you’ll need to add it to your assessable income for the financial year – much like you would any gains you make the sale of shares or an investment property.

Per Russell, the ATO is reportedly “doubling down with its data-matching technology” to make sure cryptocurrency traders pay taxes related to their gains, but exempts crypto assets worth less than AUD $10,000 as these are considered an asset for enjoyment or personal use.

Declaring Losses

This year the cryptocurrency market saw a significant decline, with BTC, the flagship cryptocurrency, going form a near $20,000 all-time high to a $3,200 low before starting to recover.

As such, Russell noted some may end up having to declare losses, which may help them reduce tax liability. The tax agent was quoted as saying:

For example if you made a $3,000 loss on the sale of cryptocurrency but a $4,000 gain on the sale of shares, your net capital gain would be the $4,000 gain minus the $3,000 loss, equalling a $1,000 capital gain.

ATO To Enforce KYC While Eyeing Crypto-Trading Gains

Reportedly, the ATO is also making it mandatory for cryptocurrency exchanges operating in Australia to verify the identity of its customers, and to report suspicious transactions that go over the AUD $10,000 limit.

Per Lifehacker’s report, an ATO spokesperson was quoted as saying:

While there is no specific label on the capital gains schedule or income tax return to identify how many people have invested in cryptocurrency we are still looking at lodgement activity this year to determine any significant impact of cryptocurrencies.

The spokesperson added, however, that through its advice and community channel areas it has received an “increase in questions relating to tax obligations of cryptocurrency activity.” Per the spokesperson, the tax agency sees this as a “positive in people wanting to do the right thing in meeting their obligations.”

Facebook to (Again) Front Congress over Libra; Top Bitcoin Analyst on ‘Block Reward Halving’ Effect

The top daily news from the cryptocurrency and blockchain space:

  • Another U.S. Congressional hearing for Facebook’s Libra.
  • Coin Metrics publishes report addressing Kik’s claims made to the SEC.
  • Top Bitcoin analyst studies price effect of block reward halving.

At the time of writing, bitcoin (BTC) and ether (ETH) are trading at $11,300.8 (+4.7%) and $313.1 (+2.1%), respectively. As for the MVIS CryptoCompare Digital Assets 10 Index, it is currently tracking at 4,927.3 (+1.9%).

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Facebook’s Libra Subject to Yet Another U.S. Congressional Hearing

The U.S. House Financial Services Committee will host a hearing regarding Facebook and its Calibra subsidiary’s new blockchain-based project, Libra, on July 17, according to Chairwoman Maxine Waters (D-CA).

The scheduled hearing will come a day after the Senate Banking Committee discusses Libra. Whilst witnesses have yet to be confirmed, it is widely expected that Libra co-lead David Marcus will testify in at least one of the hearings, according to The Hill.

Coin Metrics Reports on Kin Blockchain

Coin Metrics released a report dedicated to the level and type of activity transpiring on the Kin (KIN) blockchain. Titled ‘An Analysis of Kin’s On-Chain Activity’, Coin Metrics’s publication addresses two claims made to the Securities and Exchange Commission (SEC) by Kik about the level of activity on, and the use of, its blockchain.

In regard to blockchain activity, Coin Metrics concludes that “it depends how you define [it]. Kin could be considered one of the most active blockchains if measured by payments count, but could be considered one of the least active if measured by transfer value.”

As for how Kin’s blockchain is used, Coin Metrics investigates Kik’s claim (i.e., “over 300,000 people earned and spent Kin as a currency” in June) in terms of “active addresses.” Here, the startup found that “although Kin has a relatively high number of active addresses, it has a relatively low amount of addresses with a significant account balance.”

Top Bitcoin Analyst Studies Price Effect of Block Reward Halving

Vijay Boyapati, a respected bitcoin (BTC) analyst among the crypto community, put together a ten-part Twitter thread to explore the potential effects that next year’s Bitcoin block reward halving may have on the price of the top cryptocurrency.

Concluding that “the Bitcoin halving is a key fundamental driver of Bitcoin’s monetization,” Boyapati – a former software engineer at Google – explained that BTC often begins to trend upward roughly twelve months out from a halving event. This, he surmises, may be the reason for the BTC’s recent surge, given it is just under a year until the next halving.