Koinly Extends NFT Support and Encourages Traders to Know Their Tax Obligations
SYDNEY, September 27, 2022 (Newswire.com) - Crypto tax software Koinly has announced extended NFT support, with both ERC1155 and Solana NFTs now integrated, embracing the popularity of Non-Fungible Tokens (NFTs) after their incredible rise to prominence within 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 participants into the crypto and NFT spaces.
Australia's local tax office, the ATO, recently reminded crypto investors who may have been swept away by the mania that NFTs are taxable in the same way that cryptocurrencies are.
Danny Talwar, the Australian Head of Tax at crypto tax platform Koinly, warns that crypto investors who bought and sold NFTs over the past financial year may be surprised to find out the ATO is looking for their slice of investors' gains.
"NFTs are relatively new, so many tax offices around the globe are 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 taxes and stated they view NFTs the same way they view cryptocurrencies," Talwar said.
For those who have actively traded NFTs, bought them because they like the art, or received one as an airdrop, Koinly is here to help break it down and make sense of NFT and crypto taxes.
Is buying an NFT taxable?
Maybe. If fiat currency (like AUD) was used to purchase an NFT, this isn't taxable. But with the bulk of NFT purchases done via cryptocurrencies such as ETH or SOL, this means there is a taxable event when swapping cryptocurrency for the NFT.
"From a tax perspective, spending crypto is a disposal of an asset. The ATO sees swapping, selling, or even gifting crypto as a disposal. The profit from any disposal of a digital asset is subject to Capital Gains Tax, so it's important to declare all NFT transactions," Talwar warned.
Is selling an NFT taxable?
Yes. This is clearer, as selling a digital asset means Capital Gains Tax (CGT) is owed on any profit made. This also means that if an NFT is sold for a loss, this could be claimed as a capital loss for taxation purposes.
Similarly, swapping one NFT for another using an NFT trading platform is also subject to CGT, as the digital asset is disposed of when swapping.
How can I do NFT taxes easily?
Koinly is a crypto tax platform that helps simplify the process.
Koinly calculates capital gains, losses, income and expenses, generating a report consistent 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," Danny Talwar stated.
About Koinly: Koinly calculates your crypto taxes for you, catering to investors and traders at all levels. Whether it's 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.
Disclaimer: Koinly is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how this information relates to your unique circumstances.