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The Australia Taxation Office's crypto tax regulation has made crypto investors pay taxes in a way higher amount than the amount of the investment itself.
The Australian government has been on the news multiple times related to their approach to cryptocurrency and blockchain. While, some see it as the country's effort to embrace the nascent technology, the real-life experiences are not as many may have thought of it.
A tax agency specializing in crypto taxation just spoke to the media about the reality for cryptocurrency hodlers in the country.
Speaking to Micky.com, Adrian Forza, the director of Crypto Tax Australia said that one of his clients who owns $20,000 worth of cryptocurrency had to pay $100,000 in tax.
The shocking amount came out since he was required to declare the $250,000 worth of cryptos he owned back in January 2018, when crypto prices were in their ATH, whose value was decreased to ony $20,000 by the time the tax bill rolled in.
“That’s a really unfair outcome because he’s basically received cryptocurrency and the value has dropped significantly and now, he has to pay tax on money he doesn’t have. It was a disaster,” Forza said.
According to Forza, the “disaster” happened due to the Australian Taxation Office (ATO) requires the value of cryptocurrencies to be declared by the time they were received.
“This is something they will have to change as it is unfair,” he commented.
Moreover, he also revealed that the ATO has some other interesting regulations when it comes to cryptocurrency, which many investors are unaware of.
For instance, the ATO thinks the “original version” is the Ethereum Classic (ETC) and not the Ethereum (ETH), which is the common opinion in the crypto space, thus anyone who held ETH during the hardfork and sold it later are considered to have purchased the ETH for $0.
This means they will have to pay 100% of the capital gains tax from the money they received from selling ETH.
Same ruling also applies to Bitcoin SV (BSV) and Bitcoin Cash (BCH) hodlers.
“Any coins you received as a hard fork that will have a cost base of zero,” Forza explained.
Besides Forza, many other players in the crypto industry in the land down under think that the ATO crypto taxation regulations are desperately in need of reformation.
“It makes it really unattractive because the company gets whacked by paying FBT (Fringe Benefits Tax),” said Jonathan Carley from DigitalX, who advocates for the regulatory body to allow employees to be paid in crypto.
Stablecoins are not a solution as the ATO recognizes them as cryptocurrency, which will also attract FBT.
Carley believes that the ATO must create better definitions on different types of cryptocurrencies as well as a mechanism that would allow investors to offset the losses against the tax they have already paid.
“During the crypto boom some people crystallized some serious capital gains which they have put into another coin which is now 75% down,” he said.