Press release
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Sep 27, 2022 9:00 AM EDT
SYDNEY, September 27, 2022 (Newswire.com) –
Crypto tax 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 to prominence 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 mania that NFTs are taxable in the same way as cryptocurrencies.
Danny Talwar, the Australian head of tax at crypto tax platform Koinly, warns that crypto investors who bought and sold NFTs in the past financial year may be surprised to learn the ATO is seeking their share of investors’ profits.
“NFTs are relatively new, so many tax offices around the world have yet to issue guidance on how NFTs are taxed. In Australia, the ATO is one of the few tax offices that has clarified their treatment of NFT taxation and stated that they treat NFTs the same way on which they see cryptocurrencies,” Talwar said.
For those who have actively traded NFTs, bought them because they love the art, or received one as an airdrop, Koinly is here to help break it down and make sense of NFT and crypto taxation.
Is the purchase of an NFT taxable?
Can be. If fiat currency (such as AUD) was used to purchase an NFT, it is not taxable. But with the bulk of NFT purchases being made via cryptocurrencies such as ETH or SOL, this means that there is a taxable event when exchanging cryptocurrencies for the NFT.
“From a tax perspective, spending crypto is a disposal of an asset. The ATO sees exchanging, selling or even gifting crypto as a disposal. The profit from any sale of a digital asset is subject to capital gains tax, therefore it is important to declare all NFT transactions,” warned Talwar.
Is the sale of an NFT taxable?
Yes. This is clearer, as the sale of a digital asset means that capital gains tax (CGT) is due on any profit made. This also means that if an NFT is sold for a loss, it can be claimed as a capital loss for tax purposes.
Similarly, the exchange of one NFT for another through an NFT trading platform is also subject to CGT, as the digital asset is disposed of when exchanged.
How can I do NFT tax easily?
Koinly is a crypto tax platform that helps simplify the process.
Koinly calculates capital gains, losses, income and expenses and generates a report that complies 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 tax. This ensures the correct amount of tax is paid and ensures records are kept for the ATO – should they ever request it,” Danny Talwar said.
About Koinly: Koinly calculates your crypto taxes for you, catering to investors and traders at all levels. Be it crypto, DeFi or NFTs, the platform helps you save valuable time by reconciling your holdings to generate a crypto tax report in minutes. Sign up today.
www.koinly.io
Disclaimer: Koinly is not a financial advisor. You should consider obtaining independent legal, financial, tax or other advice to consider how this information relates to your unique circumstances.
Source: Coinly
