Australia’s tax agency won’t clarify its confusing, ‘aggressive’ crypto rules

cointelegraph.com:

Australia’s tax regulator has been unable to clarify confusing aspects of its new guidance that suggests capital gains tax (CGT) is payable on a slate of everyday decentralized finance transactions.

The ATO failed to answer direct questions from Cointelegraph on whether staking Ether on Lido or transferring funds via bridges to layer 2 networks are CGT events, leaving DeFi users in the dark about how to comply.

The Nov. 9 guidance from the Australian Taxation Office (ATO) says CGT is payable when transferring tokens to another address or smart contract that a person doesn’t have “beneficial ownership” over or if the address has a non-zero balance of the tokens.

Exchanging “one crypto asset for a right to receive an equivalent number of the same crypto asset in the future,” providing liquidity to a protocol, wrapping tokens and loaning assets are ATO examples of DeFi uses incurring a CGT event.

While the criteria suggests the rules may encompass liquid staking — such as staking Ether (ETH) on Lido — or sending tokens through a layer 2 bridge, this hasn’t been clarified.

An ATO spokesperson said in response to direct questions that the tax consequences of a transaction “will depend on the steps taken on the platform or contract, and the relevant surrounding facts and circumstances of the taxpayer who owns the cryptocurrency assets.”

The non-answer leaves investors unable to comply with possibly unintended consequences of the opaque new guidance, which has not yet been tested in court.

A CGT event would mean that if a DeFi user in Australia bought ETH for $100 and then staked it or sent it via a bridge to an L2 when the price is $1,000, they would need to pay tax on $900 “profit,” even though they haven’t sold the ETH or realized