Aussies are being warned to brace for surprise audits, huge tax bills or even investigations if they don’t do the right thing when it comes to their cryptocurrency. The Australian Taxation Office (ATO)’s “blitz” has begun, with the tax office using data-matching to crack down on investors.
The end of the financial year is just around the corner and the ATO will be watching cryptocurrency activity. The ATO collects records from Australian cryptocurrency service providers on an ongoing basis to ensure people trading in crypto are paying the right amount of tax.
Koinly CEO Robin Singh told Yahoo Finance the ATO’s data-matching was already underway and cryptocurrency was no longer “invisible” from the tax man.
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“If you think the ATO isn’t watching, you’re already at risk,” he said.
“Whether you made $10 or $10 million, the ATO’s data-sharing with crypto exchanges means they know you’ve had crypto activity throughout the financial year. And they’ve been tracking data for years.”
Data provided to the ATO includes cryptocurrency purchase and sale information. It has had a crypto data-matching program operating since April 2019.
Generally, as an investor if you buy, sell, swap for fiat currency, or exchange one cryptocurrency for another, it will be subject to capital gains tax and must be reported.
Investors may have a capital loss or capital gain, which needs to be included in their tax returns. If you’ve held onto a crypto asset for 12 months or more, you may be eligible for a 50 per cent capital gains discount.
Do you have a tax story to share? Contact tamika.seeto@yahooinc.com
Blake Cassidy, CEO of micro-investment app Bamboo, said the last 12 months had been “extremely volatile” for the crypto market due to broader economic conditions.
“Bitcoin has been steadily trending up due to institutional adoption, while alt coins such as Solana and Ethereum have had relatively poor performance,” he told Yahoo Finance.
“It is crucial for Australians to record both their crypto gains and losses due to the ATO treating cryptocurrency as property for capital gains tax purposes.”
Singh said the “smartest move” Aussies could make was to accurately report all crypto activity, even losses.
He warned that missing or underreporting activity could lead to “audits, penalties, or even criminal investigations”.