- A University of Queensland study reveals a significant portion of crypto owners are unaware of their tax obligations.
- The study also shows that over $171 million was lost to crypto scams in 2023, highlighting the need for better financial education.
- Useful guides on crypto tax software and specialist accountants in Australia are available to help owners during tax season.
- Options like ETFs and SMSFs offer alternative ways for Australians to manage and store crypto with potential tax benefits.
They say only two things in life are certain: death and taxes, or at least that’s what Benjamin Franklin wrote in a letter to Jean-Baptiste Leroy in 1790.
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Well, as we’re not here to talk about death, we need to talk about another much-disliked topic: taxes. A recent study by the University of Queensland (UQ) found that many crypto owners are unsure about how to treat their crypto holdings and many altogether avoid declaring them when it’s tax time.
Many Unaware of Their Obligations Come Tax Time
As per the study, 66% of the 745 holders surveyed were aware they had to pay taxes, leaving almost 1.5 million Aussies unclear about their tax obligations, which may lead them to omit crypto from their tax returns altogether.
If investors are not aware, they may omit this on their annual tax return and be contacted by the Australian Taxation Office later when discovered.
Associate Professor Levron Blue, University of QueenslandThe team of researchers around Associate Professor Levron Blue also found that $171 million was lost to crypto scams in 2023 and that education around crypto is crucial – especially about how to avoid scams, store crypto safely and understand tax obligations.
Our findings suggest that online financial education from trusted independent sources is urgently needed to help combat scams and to keep Australians and their crypto assets safe.
Associate Professor Levron Blue, University of QueenslandIn case you’re interested, Crypto News Australia has some great resources here, including a Crypto Tax Calculator. There’s also a guide on the best crypto software in Australia as well as a guide on 9 crypto tax accountants in Australia who specialise in cryptocurrency tax matters.
These not only will help reduce stress around tax time but they’re also absolutely free.
Other Crypto Investment Options for Aussies
Apart from taxes, the UQ study also touched on the topic of storing crypto. According to the study, almost 60% of survey respondents reported holding their crypto in a software wallet, with only 16.9% using a hardware wallet.
Data from leading Australian-owned tax software provider Crypto Tax Calculator indicates that the majority of Australian crypto investors have more than one wallet or exchange account, making tax time exponentially more complicated as they try to calculate gains and losses in several places.
Interestingly, almost half used centralised exchanges to store their digital assets.
Of course, one way to avoid holding Bitcoin directly is to invest in an exchange-traded fund (ETF). Although Australians have several options to hold Bitcoin and Ethereum through ETFs, suitable local ETFs for other altcoins are currently limited.
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Which means that a self-managed super fund (SMSF) could be an interesting option for Australians.
A SMSF can be a great way to engage with any cryptocurrency, while gaining some interesting tax advantages, and they’re generally not limited to Bitcoin or Ethereum. The ATO says that currently $1 billion of crypto is being held in SMSFs. You can read more about that in our guide here. Make sure you do your research, as it’s not for everyone and comes with responsibilities.
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