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Edited version of private advice
Authorisation Number: 1051976096088
Date of advice: 25 May 2022
Ruling
Subject: Crypto assets - personal use
Question
Can the capital gains you made when selling the Non-Fungible Tokens (NFT's) be disregarded on the basis that the NFT's were personal use assets acquired for less than $10,000?
Answer
Yes.The Commissioner can accept that the NFT's that have been sold are personal use assets and accordingly the capital gains you made are disregarded.
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
In the 20XX income year, you acquired eight different Non-Fungible Tokens (NFT's) for less than $10,000. The purchase of these tokens represented the ownership interest in various digital artworks.
The NFT's are images of unique landscapes created by an unknown artist.
You collect art for your personal enjoyment and acquired the NFT's for your personal enjoyment and in admiration of the digital arts. You stated you liked the visual aesthetic and design of the NFT's, and you enjoy collecting art.
The only rights attached to the NFT's are your ownership recorded on the Ethereum blockchain.
You did nothing with the NFT's besides look at them online occasionally.
In the 20XX income year, you sold three NFT's and made a capital gain on each.
You sold the first NFT as part of a charity auction. During that process, you sold the NFT to a collector and donated the proceeds to a Deductible Gift Recipient.
The other two NFT's were sold to the same collector and the proceeds were not donated.
You have not previously sold digital art or collectables.
You did not purchase any similar NFT's during the ruling period besides the eight NFT's noted above.
Assumption
The NFT's you purchased are not collectables as defined in subsection 108-10(2) of the Income Tax Assessment Act 1997
Relevant legislative provisions
Income Tax Assessment Act 1997 section 108-10
Income Tax Assessment Act 1997 subsection 108-10(2)
Income Tax Assessment Act 1997 section 108-20
Income Tax Assessment Act 1997 subsection 108-20(2)
Income Tax Assessment Act 1997 subsection 118-10(3)
Income Tax Assessment Act 1997 section 995-1