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Crypto Scams | 2023 Gotax

August 29, 2023

Can you deduct the losses from Crypto Scams?

The short answer is NO, but there is also a Yes.

According to the Australian Taxation Office, it is unlikely that the loss from a scam can be claimed as a tax deduction on your income tax return. So it will not be tax deductible.

However, as it falls directly outside the scope of a "deduction" you may, nonetheless, be entitled to a "Capital Loss" which can be offset (ONLY) against capital gains.  If you cannot utilise the Capital Loss in the year of the tax return, then it will be available for offset in future capital gains years.

This doesn’t technically reimburse the loss as a full tax refund, but instead contributes to the overall lodgement calculation of the year the loss is applied, impacting on the tax obligations for that year.

For example, if you were scammed into investing in a crypto currency and lost your investment, you may be able to claim a capital loss on your tax return. This is because you had legal ownership of the crypto currency investment. However, if you were scammed into paying for goods or services that were never provided, it is unlikely that you would be able to claim a deduction for this loss.

Thanks for reading.

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