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Selling NFT Artwork - when does it become taxable income?

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Hello. I have a couple of questions regarding NFTs. 

 

• I've sold a couple of NFT artworks and been paid in Ether (Ethereum). I have held it in Ether and have not disposed of it to Fiat currency (and don't intend on doing so for some time). Do I declare it as income/pay tax on it at the date it was sold for the converted Fiat value and then pay any CGT on the remainder only once disposed of (eg 2 years later)? 

 

• I am self-employed and work in graphic design, illustration and animation. The NFT art sales are using the same skills/tools as my usual business dealings - does that mean the NFT sales are business income, and Ethereum Gas fees are a claimable expense?

 

Thanks in advance for your help.

Chris

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ATO Community Support

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Hello @Crispe,

 

Congratulations on the sale of your NFT artworks!

 

It depends on if you create and sell this work as part of your business, or if it is a hobby.

 

To help you determine if creating NFT artwork has the same characteristics as your business, please see the Are you in business? Page on our website.

 

If the you have earned the income as a hobby, then upon the sale of your Ether you will declare your capital gain or loss.

 

If it is business income, then you will declare the value of Ether in Australian dollars as part of your ordinary income.

 

Our business tax deductions page can help you work out your eligible expenses.

1 REPLY 1

Most helpful response

ATO Certified Response

ATO Community Support

Replies 0

Hello @Crispe,

 

Congratulations on the sale of your NFT artworks!

 

It depends on if you create and sell this work as part of your business, or if it is a hobby.

 

To help you determine if creating NFT artwork has the same characteristics as your business, please see the Are you in business? Page on our website.

 

If the you have earned the income as a hobby, then upon the sale of your Ether you will declare your capital gain or loss.

 

If it is business income, then you will declare the value of Ether in Australian dollars as part of your ordinary income.

 

Our business tax deductions page can help you work out your eligible expenses.