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_0xb3b3(Initiate)Initiate
24 Aug 2021

Hi there,

Recently I bought fractions of an artwork, which was itself offered as an Ethereum NFT.

I have read the ATO article on NFTs, and I have also read the article on collectables. Some questions:

  • Are NFT Artworks considered collectables? If not, why not?
  • Are fractionalised NFT Artworks considered collectables?
  • Does the $500 maximum valuation on collectables at time of purchase (for them to be considered exempt from capital gains) apply to the underlying NFT artwork or to both the underlying artwork and the fractions?

Thanks

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1,549 views
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_KaraBATO(Community Support)Community Support
27 Aug 2021

Hello @0xb3b3,

No, NFTs are not considered collectibles for tax purposes.

This is because for tax purposes they are treated the same way as cryptocurrency.

We define cryptocurrency as a digital asset in which encryption techniques are used to regulate the generation of additional units and verify transactions on a blockchain.

NFTs are a blockchain-based digital assets and therefore follow the same principles as cryptocurrencies for tax purposes..

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Most helpful reply

_KaraBATO(Community Support)Community Support
27 Aug 2021

Hello @0xb3b3,

No, NFTs are not considered collectibles for tax purposes.

This is because for tax purposes they are treated the same way as cryptocurrency.

We define cryptocurrency as a digital asset in which encryption techniques are used to regulate the generation of additional units and verify transactions on a blockchain.

NFTs are a blockchain-based digital assets and therefore follow the same principles as cryptocurrencies for tax purposes..

_TOC(Newbie)Newbie
17 Sept 2021

The ATO seem to be quite misinformed about digitial assets. Just becase an NFT is built on a blockchain does not mean it is a cryptocurrency. An NFT of a digital piece of artwork is completing difference to a Bitcoin, so why are they treated the same for tax purposes?

NFTs can be digitial collectibles, such as art, trading cards, in game items etc. How the ATO can not understand this is unbeliveable.

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Are fractionalised NFTs considered collectables by the ATO? | ATO Community