Bought Bitcoin? The Tax Office has you in its sights

Unless you are living under a rock, most of us have heard of the term cryptocurrency or, at the very least, Bitcoin. If you haven’t, cryptocurrency is generally used to describe a digital asset in which encryption techniques are used to regulate the generation of additional units and verify transactions on the blockchain.

Not that most of us understand what that means. To most people, Bitcoin and other cryptocurrencies were discussed at dinner tables and over drinks across Australia because they were the new black when it came to surging assets. Suddenly, it wasn’t just Dungeons and Dragons players or underworld types who were dealing in cybercurrency, everyone wanted to get in on the action.

This means in the 2018 financial year there is a boatload of people from Millennials to Baby Boomers who have either owned or sold some type of cryptocurrency asset. If that’s you, with tax time looming, the question you need to consider, is what does buying, selling or holding these cryptocurrencies mean for you?

Is it like a bank account where you pay tax on interest earned, do you pay tax if you sell the currency or what happens when you use your cryptocurrency to purchase personal use assets?

The reason it’s important to understand is that the Tax Office is taking a close interest in what you’re declaring when it comes to digital currencies. And the fact that you didn’t know won’t be an excuse if you receive a data matching audit and a please explain.

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Source: Bought Bitcoin? The Tax Office has you in its sights