INTHEBLACK July/August 2023 - Magazine - Page 49
“The innovative nature of some digital assets can also
result in tax uncertainty around certain events or assets
such as airdrops or non-fungible tokens.”
ELINOR KASAPIDIS, CPA AUSTRALIA
of carrying on a business as expressed in
Taxation Ruling 97/11 Income tax: am I
carrying on a business of primary production?.
“While crypto may appear anonymous,
we can track money trails back to taxpayers
through data from banks, financial
institutions and crypto asset exchanges,”
the ATO spokesperson warns.
“We acquire data from some Australian
crypto asset exchanges. The data collected
between 2019 and 2022 identified more
than 1.52 million taxpayers as having
transacted with these Australian crypto
asset exchanges.”
The ATO says more than one-third of
people transacted for the first time in 2022.
“We can match this data to an individual
to assist people trading in crypto assets
to properly account for these transactions
and pay the right amount of tax.”
“Anyone choosing not to act may receive
further scrutiny and an audit of their affairs.”
CRYPTO FRAUD RIFE
The crypto space is often associated
with criminal activity. Australians were
duped out of A$242.5 million between
January and July 2022. Investment
scams were the main culprits, up by
314 per cent on the previous year.
Security services platform Immunefi
notes that the global crypto space lost
almost US$4 billion (A$5.9 billion)
in 2022 due to hacks and scams.
“Scammers are opportunistic,” warns
Allemand. “They prey on people’s
insecurities and lack of knowledge.
“Cryptocurrency and blockchain
technologies are poorly understood by
the general public, as many of the terms
and associated jargon are complex.
“In insolvency, we are seeing more and
more of the older generation investing
in crypto, and they are typically more at
risk of being scammed and do not appear
to seek expert advice,” he explains.
Allemand recommends looking for
exchanges and brokers associated with
Blockchain Australia, which is the country’s
peak industry network for businesses
implementing or evaluating blockchain
or distributed ledger technology.
WATCH OUT FOR “DODGY” COINS
As with any investment, information
and expert advice are key.
“Seek guidance on the type of crypto
coin to invest in and understand the value
of the underlying blockchain technology
underpinning that coin,” Allemand advises.
“There are a lot of ‘dodgy’ coins that have
done the rounds on social media and received
‘celebrity’ endorsements, leading to inflated
valuations and, ultimately, poor investments.
“High risk can sometimes mean a high
reward, but it is best to approach these
investment opportunities with diligence
and caution.
“Accountants may be best advised to direct
clients to contact a specialist adviser, because
they can offer some insight into legitimate
investment opportunities and direct investors
away from potentially fraudulent schemes.
Using a trusted adviser will ultimately reduce
the risk and enable safe and successful trading
and investing.”
Allemand stresses how important it is
to seek guidance on the safest type of wallet
for storing crypto.
“A good rule to keep in mind and ensure
you are protecting your investment is that,
if it is not in your wallet, it is not your crypto.
“Investors cannot be certain of their
holdings unless they are stored in a wallet
for which they alone hold the keys,”
Allemand explains.
It is important to note that the terms
and conditions on most crypto exchanges
specify that custodial wallets held on
a centralised exchange are not fully owned
by the account holder.
With many issues and risks for investors
and their advisers when it comes to crypto,
it is important to proactively manage crypto
investments. It is especially vital to ensure
that crypto holdings are legitimate, secure
and correctly reported.
Accountants should make sure to ask
clients about their crypto investments
and seek specialist advice if needed.
MOST COMMON
CRYPTO ASSETS
IN AUSTRALIA:
Coins and tokens,
such as
BITCOIN
a cryptocurrency
USD
a stablecoin
DAI
an investment token
GALA
a game token
BAYC
a non-fungible token
Source: ATO
BORROW
The Book of Crypto:
The Complete Guide to
Understanding Bitcoin,
Cryptocurrencies and
Digital Assets from
the CPA Library
intheblack.cpaaustralia.com.au 49
