Crypto has had a big month. First, there was the crypto crash which saw a huge decline in the value of several stable coins, becoming virtually worthless. Then, we had the announcement from the ATO that Cryptocurrency would be under the microscope come tax time.
Whist many people were shocked to see such a swift decline in the value of the stable coins, the ATO’s announcement came as less of a shock. Crypto has been at the top of the ATO’s list for the last few years, monitoring capital gains and losses.
Crypto owners who have seen a major loss in the value of their coins may have disposed of their investments for whatever price they could get. We see this in the traditional market too when there is a major decline.
The misconception here is that when the value is down, you have ‘lost’ money. This is untrue. If you continue to hold an asset, you have not lost any money until you physically sell.
If you are a Crypto investor who has seen a loss recently you may be wondering how this will impact your tax.
The best thing you can do is report your losses. When you report your losses from Crypto, you may be able to offset gains in other areas.
Remember, if you own crypto, it should be part of a diversified portfolio. A diversified portfolio will help to offset any losses like this by balancing out gains in other asset classes.
If you have experienced a capital loss from cryptocurrency, get in touch with your advisor.
Alternatively, you can get in touch with our financial planning division for advice on creating a more diversified portfolio.