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When can we expect some answers on Cryptocurrency questions?

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Megastar

Views 1872

Replies 4

At the risk of sounding impatient, it is now well over a month since there have been any meaningful answers from the ATO to questions in this forum. When can we expect some answers? The end of financial year is now only a few months away and many of us would like to know what we will have to do to prepare our tax returns. Having this forum is a great idea but it's of little use if noone is getting timely and definitive replies.

 

There are also reports of people contacting the ATO by phone for answers on cryptocurrency and getting the run around there as well.

 

Does the ATO want us to pay our taxes or not??? I realise that this whole cryptocurrency thing is new, but how can we be expected to know what to do when even the ATO doesn't seem to know?

 

Given the amount of conflicting, vague, and incorrect information being circulated on the internet it is utterly irresponsible of the ATO to not be giving clear, timely, and trustable advice, and correcting bad advice where it is given. We need answers ASAP. It shouldn't be that hard. Why is it so hard to define what a "personal use asset" is, for example? Make up your minds!!!

 

1 ACCEPTED SOLUTION

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ATO Certified

Devotee

Replies 3

Hi @SetiMaster,

Thank you for taking the time to write to us. We know that there’s a lot of confusion and concern around how we treat cryptocurrency for tax purposes, and we appreciate your patience and understanding while we work on providing guidance that is clear and easy to understand.

We remain committed to providing this in a way that is timely without being so rushed that we slip into making mistakes that we later have to correct. Our approach so far has involved:
•    assessing the risk associated with the issue, not the product type (we need to understand the risks before we provide advice)
•    working with industry and tax professionals to identify topics and areas of concern
•    consulting stakeholders early and frequently throughout the process
•    working to draft clear guidance that is accessible, current and tailored to many different circumstances.

One of the difficulties is that the right answer will often depend on your circumstances, and your circumstances might differ from the rest of the community. Our challenge is to try to write an answer that explains the topic clearly for everyone - and all of this takes time and careful consideration.

Cryptocurrency is dynamic – as all investors are very much aware! The nature of cryptocurrency means that we also need to test and make sure that our position (1) follows the existing law and (2) offers flexibility for future developments in the cryptocurrency sphere.

We acknowledge we have been working through this process for several months now. You will be pleased to hear we are about to release our answer on the issue you raise in your request (defining the term ‘personal use assets’) and hope to answer the other questions posed in the Community over the coming weeks.

Thank you again.

 

4 REPLIES 4
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Best answer

ATO Certified

Devotee

Replies 3

Hi @SetiMaster,

Thank you for taking the time to write to us. We know that there’s a lot of confusion and concern around how we treat cryptocurrency for tax purposes, and we appreciate your patience and understanding while we work on providing guidance that is clear and easy to understand.

We remain committed to providing this in a way that is timely without being so rushed that we slip into making mistakes that we later have to correct. Our approach so far has involved:
•    assessing the risk associated with the issue, not the product type (we need to understand the risks before we provide advice)
•    working with industry and tax professionals to identify topics and areas of concern
•    consulting stakeholders early and frequently throughout the process
•    working to draft clear guidance that is accessible, current and tailored to many different circumstances.

One of the difficulties is that the right answer will often depend on your circumstances, and your circumstances might differ from the rest of the community. Our challenge is to try to write an answer that explains the topic clearly for everyone - and all of this takes time and careful consideration.

Cryptocurrency is dynamic – as all investors are very much aware! The nature of cryptocurrency means that we also need to test and make sure that our position (1) follows the existing law and (2) offers flexibility for future developments in the cryptocurrency sphere.

We acknowledge we have been working through this process for several months now. You will be pleased to hear we are about to release our answer on the issue you raise in your request (defining the term ‘personal use assets’) and hope to answer the other questions posed in the Community over the coming weeks.

Thank you again.

 

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Megastar

Replies 2

Hi Amanda,

 

Thank you for your reply. I understand that the ATO doesn't want to rush answers and risk making mistakes, but isn't it just a little bit ridiculous that the ATO's guidance paper on Cryptocurrency was published in 2014 and only now it is defining what it means?

 

Is the ATO going to grant some kind of amnesty for those who up to this point have acted on a good faith interpretation of the "personal use asset" rule given that it is only being defined now?

 

At this moment there are many people who have been acting under the assumption (from their interpretation of personal use asset in the ATO guidance paper) that so long as the cryptocurrency cost or value is under $10000 there are no tax obligations. I'm pretty sure that was not the intent and yet there is a lot of misinformation on the Internet about this. What is the ATO doing to ensure that this is corrected? It would seem the ATO will need some kind of task force to engage with cryptocurrency users on internet forums and set the record straight, and this should be done ASAP so people have some chance before the end of the financial year to understand and prepare for their tax obligations.

 

Also, I've looked through the answer you've given (https://community.ato.gov.au/t5/General-tax/Can-cryptocurrency-be-a-personal-use-asset/ta-p/3393?pag...), and unfortunately it seems we're no closer to understanding definitely what a "personal use asset" is, only what it is not:

 

  • Cryptocurrency that is kept or used mainly for the purpose of profit-making or investment is not a personal use asset. <- Ok.
  • Cryptocurrency that is kept or used to facilitate purchases or sales in the course of carrying on business is not a personal use asset. <- Fine.
  • Cryptocurrency that was acquired and is kept or used mainly to make purchases of items for personal use or consumption may be a personal use asset. <- Why, oh why oh WHY is the weasel phrase "may be" used in this sentence? We need to know what a personal use asset *IS*, not just what it is not. Can we assume that if cryptocurrency is not acquired primarily for profit, or for use in a business transactions, and is mainly used to make purchases for personal use, it is a "personal use asset'? If not, why not? And in what *specific* circumstances would it not be if it is not excluded by the first two criteria?

I need a yes or no answer. Not definitely maybe...

 

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Devotee

Replies 1

@SetiMaster

Let’s have a go here ourselves and see what we can conclude.

The ATO protects redistribution of income and wealth for our societies fundamental fabric.

The basic principle is that those of us who have more are required to pay more than those of us who have less.

Over a period of time “more” is gain, and less is loss.

Who gained, who lost, What base did they start from - pretty simple.

From there government is entitied to cause the economic engine to adjust to the benefit of the cause of the fundamental fabric of society where straight redistribution on the basic who has more who has less principle.

So for example. Government might give tax breaks for investment in suppliers of work that will not be impacted by robotics, and charge a robot hour levy, to build up capacity to both benefit from the greater production of robots for all but ensure jobs are available meaning it does not cause unemployment, creates a pool of money for redistribution shouid owning robots create profit with no compulsion to support displaced workers, and create the political path to full bore productivity gain in use of robotics.

But there is also a very important part of the tax system that must be looked at.

And that is the capacity for particular things to be used for tax avoidance or to make the collection of tax too expensive.

At an individual level those wanting definite answers right now are in some ways taking a hit for the community as a whole in the protection of our very very important tax system.

Don’t spend any large gain, don’t bank on the bringing to account of any large loss.

In the end th ATO does no make the Law. Then ATO as understand it will stand by a view it is expresses. In the absence of a view the Courts will decide.

So that’s the general context I believe.
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Devotee

Replies 0

Getting to the specifica, in terms of a view on the situation regards tax, does this seem correct:

Current Situation:

If you intend to make money by exchanging crypto for other assets then you need to account for the gain or loss.

If your intention was not to make money then you need to account for any gain where you purchased the crypto for more than $10,000 (but cannot account for the loss)