The 2022 year proved to be extremely volatile in the cryptocurrency market. Bitcoin moved from an alltime high of nearly $90,000 in November 2021 to below $30,000 in June 2022.

In a falling market, a number of clients realised crypto losses prior to 30 June 2022. The ability to treat such losses as either revenue or capital losses will have a significant tax impact for clients.

The ATO appears to have a strong preference for cryptocurrency being on capital account. Their website guidance provides a detailed section on ‘How to work out and report CGT on crypto’ which states “the most common use of crypto is as an investment, in which case the crypto asset is a CGT asset”. A number of clients have also had a ‘CGT event’ flagged on their ATO pre-fill reports for crypto transactions identified by the ATO.

In a declining market, it is clearly in favour of the ATO to treat crypto losses on capital account as such losses can only be offset against capital gains. If you require assistance with your crypto, please get in touch with our crypto team here at Armada – crypto@armada.com.au