Australia’s ATO Targets Crypto Investors in Tax Crackdown
To verify tax compliance, the Australian Taxation Office requires cryptocurrency users in Australia to report their activities. The ATO warned them that they could face stiff penalties if they do not report income or pay taxes on crypto holdings. It stated that over 350,000 people will receive emails or letters to remind them of their obligations.
Thousands of Australian taxpayers across the country have already received instructions on how to accurately report their cryptocurrency-related income and amend their tax returns, if necessary.
This letter is intended to be frightening to those who have sold virtual coins in the 2017/18 financial years. It will ask them to review their returns and determine if they have any undeclared profits.
Although the ATO previously published a guide for crypto dealers in order to shed light on taxation, the ATO’s latest letter appears to be a generic mailing campaign which warns tax cheats and not an individual enforcement action.
The Tax Office views digital assets as more than just money. According to their transactions and activities, cryptocurrency investors could owe income tax, corporation tax, or capital gains taxes.
The ATO went further and indicated that it had obtained cryptocurrency transaction data from local exchanges regarding taxpayers who bought or sold cryptocurrency. Exchanges or brokers located in Australia must inform the tax watchdog about all cryptocurrency transactions, regardless of value.
Customers will need to report transactions on foreign exchanges when their trading volume exceeds certain thresholds.
Regulators push back against crypto investors
“Using this data, we’ve discovered that some people might not be aware of tax obligations due to cryptocurrency’s complex nature,” an ATO spokesperson told news.com.au.
He said that if we see that another taxpayer holds cryptocurrency but has not sold or traded it during the financial year, we will write to them to remind them about their tax obligations as well as the records they should keep.
Recent reports have shown that tax authorities are cracking down on cryptocurrency traders. Taxpayers who have not reported income or paid the tax due to cryptocurrency transactions were also sent letters by the US Internal Revenue Service (IRS).
The IRS still considers crypto assets property and not currency, as per its regulatory guidance five years ago. This means that the IRS will continue to tax crypto profits as well as losses at capital gains rates.