The ATO has issued a warning to taxpayers new to cryptocurrencies to be aware of the components that comprise a crypto asset’s cost base, and to encourage them to keep immaculate records.
The ATO stressed the importance of “getting the cost base right,” which they have said has emerged as a leading pain point in the tax treatment of cryptocurrencies.
One often-overlooked element of a crypto asset’s cost base, are instances where an investor has borrowed money to invest in cryptocurrency. Generally the interest expenses would form part of the cost base. This is unlike borrowing money to purchase shares which pay dividends where the interest expenses may be claimable immediately.
The ATO are getting cryptocurrency information from Australian Cryptocurrency exchanges to cross reference returns. And when people have had significant capital gains events according to that data, if it’s not reported in the return, they will be looking to hold those returns and again enquire with the taxpayers as to where those transactions are.
For further information please contact our office on 9387 5637.
