SYDNEY, September 27, 2022 (Newswire.com) –
Crypto-treasury software Koinly has announced expanded NFT support, with both ERC1155 and Solana NFTs now integrated, embracing the popularity of Non-Fungible Tokens (NFTs) following their incredible rise in the crypto space in 2021.
With estimates from the Financial Times and Chainalysis that over 300,000 people now own an NFT, many are in the dark about their tax obligations with such a large influx of new entrants into the crypto and NFT spaces.
Australia’s local tax office, the ATO, recently reminded crypto investors who may have been swept up in the craze that NFTs are subject to tax in the same way as cryptocurrencies.
Danny Talwar, the Australian head of tax at crypto tax platform Koinly, warns that crypto investors who have bought and sold NFTs over the past financial year may be surprised to find that the ATO is looking for their share of investors’ gains.
“NFTs are relatively new, so many tax offices around the world have yet to provide guidance on how NFTs are taxed. In Australia, the ATO is one of the few tax offices that has clarified the treatment of NFT taxes and stated that they are looking at NFTs —is like the same way they look at cryptocurrencies,” Talwar said.
For those who have actively traded NFTs, bought them because they enjoy the art, or received one as an airdrop, Koinly is here to help break it down and understand NFT and crypto taxes.
Is the purchase of an NFT taxable?
May be. If fiat currency (such as AUD) was used to purchase an NFT, this is not taxable. However, with the bulk of NFT purchases being made via cryptocurrencies such as ETH or SOL, this means that exchanging cryptocurrency for NFT is a taxable event.
“From a tax perspective, using crypto is a disposal of an asset. The ATO views exchanging, selling or even giving away crypto as a disposal. The profit from any disposal of a digital asset is subject to capital gains tax, so it is important to declare all NFT transactions,” Talwar warned.
Is the sale of an NFT taxable?
Yes. This is clearer, as selling a digital asset means capital gains tax (CGT) is payable on any profit. This also means that if an NFT is sold at a loss, this can be claimed for tax purposes as a capital loss.
Similarly, exchanging one NFT for another using an NFT trading platform is also subject to CGT, as the digital asset is disposed of on exchange.
How can I easily pay NFT tax?
Koinly is a crypto tax platform that helps simplify the process.
Koinly calculates capital gains, losses, income and expenses, and generates a report in accordance with ATO guidelines. Koinly supports NFTs across most blockchains (including Ethereum, Solana, Polygon and Binance Smart Chain) and is always adding support for more platforms.
“The ATO allows the use of tax software tools to help calculate and prepare crypto taxes. This ensures the correct amount of tax is paid and ensures records are kept for the ATO – should they ever request them,” stated Danny Talwar.
About Koinly: Koinly calculates your crypto taxes for you, catering to investors and traders of all levels. Whether it’s crypto, DeFi or NFT, the platform helps you save valuable time by reconciling your holdings to generate a crypto tax report in minutes. Register today.
www.koinly.io
Disclaimer: Koinly is not a financial advisor. You should consider seeking independent legal, financial, tax or other advice to check how this information relates to your unique circumstances.
Source: Coinly
