NFT

The abbreviation stands for non-fungible token.  This is a unique digital certificate which uses blockchain technology to certify ownership and authenticity of a digital asset.  If a good or asset is fungible it can be exchanged for a good or asset of the same type, a process which simplifies trade and exchange processes.  I can exchange a dollar for another dollar, or for two fifity cent coins and it makes no difference to the amount of money I have.  This term is limited to business and finance and comes from the Latin fungibilis (from the Latin fungi to perform) meaning ‘fulfilling the office or function of (something else)’, ‘taking the place of (something else)’.  

 A non-fungible good or asset cannot be replaced by a similar good or asset in this way. The ATO defines it as a ‘unit of data stored on a digital ledger’ which is unique and therefore not interchangeable.  It is an ownership interest in any tangible or intangible asset. The NFTs are certificates of ownership made secure by blockchain technology.

 The example they give is of an artist who paints a portrait of a famous Australian and sells 10 NFTs which provide the owners with the right to have an exclusive four-hour sitting in the artist’s viewing room each year for up to 20 people.  On the other hand a relative of the subject of the portrait might be given the right to have a personal viewing with family and friends once a year. The first NFTs are subject to tax, the second isn’t.