The ATO is expected to continue to develop its position on the tax treatment of cryptocurrency as the digital currency gains greater interest from average investors, as well as SMSFs.
During the Institute of Public Accountants 2018 National Congress in Sydney last week, Augmentor principal Peter Adams said: “The tax office does recognise that this is a moving space – things will change and things will evolve – so they need to be able to move with the times.
“What they have undertaken is to consult widely before they come up with a more definitive platform to deal with bitcoin and cryptocurrency.
“That’s a positive step in that they haven’t been too dogmatic and instead have stated their position now but it is open to having that position evolve as the market evolves, and what we’re finding with advisers and accountants is we’re getting constant inquiries from clients and from people who want to dabble in bitcoin.”
However, Adams warned the interest in cryptocurrency involves a FOMO (fear of missing out) theme.
“Some people ascribe to it as being the same sentiment as the tech bubble, so because of the buzz. A lot of these people aren’t traditional investors and don’t really appreciate market fundamentals and the like,” he said.
“But of course, as advisers we have to be conscious of the risks associated with it and the tax treatment associated with it.”
For SMSFs, one of the key risks is the audit trail as very detailed records of trades and activities are essential, as well as ensuring their adviser or accountant is informed of their cryptocurrency investments.
“Otherwise when clients pass away, no one has any idea that they’ve got cryptocurrency or maybe they do, but they don’t know what platform it’s sitting on and there’s no way for anyone to access it,” he noted.
“Interestingly, I have seen cryptocurrency included in people’s wills.”
Augmentor provides tax education and training, business advice and solutions, and mentoring.
