A CGT event needs to be triggered in order to crystallise a capital gain or loss. That is, unrealised gains and losses do not generally need to be reported for tax purposes. However, it is important to remember that a CGT event will normally be triggered if a taxpayer exchanges one crypto asset for another crypto asset, converts crypto to a fiat currency (e.g., to $AUD) or uses crypto to obtain goods or services.
Gains and losses from the disposal of cryptocurrency should be reported in your tax return in the year that the disposal occurred. If you earned income from crypto such as airdrops or staking rewards, then these also need to be reported in your tax return.
If you made a capital gain on crypto that was held as an investment, and you held the crypto for more than 12 months then you may be able to access the 50% Capital Gains Tax (CGT) discount and halve the tax you pay.
If you made a loss on the cryptocurrency (capital loss) when you disposed of it, you can generally offset the loss against capital gains you might have (unless the crypto is a personal use asset). But you can only offset capital losses against capital gains. You cannot offset these losses against other forms of income like salary and wages, unfortunately. If you don’t have any capital gains to offset, you can hold the losses and carry them forward for another future year when you can use them.
DATA MATCHING
The ATO can track money trails back to taxpayers through data from banks, financial institutions, and crypto asset online exchanges. So, remember, keep records of your crypto transactions.
The ATO uses this data to help educate investors on the tax obligations and remind them to include crypto transactions on their tax return.
Those who correct their return won’t receive any penalties; however, anyone choosing not to act may receive further scrutiny and an audit of their affairs, either before or after their notice of assessment issues. This may also delay the processing of tax returns and any refunds that are due.