Australia’s Revenue Service has reminded an increasing number of crypto investors about their tax obligations. Disregarding the common belief that crypto profits are taxable only when the coins are returned in dollars, the tax office will prompt hundreds of thousands of taxpayers to report gains and losses from their cryptocurrency transactions.
The tax office targets Australians with crypto-related obligations
Concerned about tax evasion by cryptocurrency investors, the Australian Taxation Office (Ato) Has set out to debunk the myth that cryptocurrency benefits are taxable only when digital assets are converted to fiat money. People often think that digital coins are currencies but in reality, they are classified as assets, and profit from cryptocurrency trades is like profit from other investments, the tax authority explained.
The ATO has estimated that 600,000 Australians have recently invested in cryptocurrency amid the rising popularity of crypto trading and rising market prices. Agency is going to send now warning letter 100,000 taxpayers asked them to review their already filed returns. Australian media reported that another 300,000 Australians would be motivated to report their gains and losses from cryptocurrency deals as they file their 2021 tax returns.
The tax office also revealed that it is closely monitoring the points where cryptocurrency interacts with fiat systems, helped by both the traditional financial sector and the crypto industry. According to ATO Assistant Commissioner Tim Loh, the agency tracked the money back to the taxpayer using data matching profiles with cryptocurrency exchanges, who also told news.com.au:
There is no game of hide and seek. We have received that information and we are asking people to follow only the rules. We know that most Australians follow the rules.
Australian capital gains tax also applies to NXT, ATO warns
The ATO official further elaborated that the tax administration considers the gain from cryptocurrency to be similar to the gain from shares, for example. The tax is payable not only when an investor swaps crypto for fiat money, but also when one coin is exchanged for another and such transactions must also be reported. In addition, the Australian capital gains tax also applies to the disposal of irreparable tokens (NXT), Commented Tim Loh. At the same time, taxpayers are exempted from holding cryptocurrency funds as long-term investments for 12 months or more.
A different rule applies when the business or sole trader acquires cryptocurrency for the goods and services they provide. Such payment will be taxed. Income Based on the value of digital coins calculated in Australian dollars. Recognizing that the case is quite complex, the ATO is now focusing on helping the Australian team properly fill in their announcements. Tim Loh advised him:
The best tip for reducing your cryptocurrency gains and losses is to keep accurate records, including transaction dates, the value in Australian dollars at the time of the transaction, what the transactions were, and who the other party was, even if it was just their wallet address.
Loh’s comments also indicated that the Australian Tax Authority considers the failure to report obligations as a greater sin than a mistake on the declaration. The tax agent warned, “Failure to report on crypto-assets and not taking action on reminders will result in penalties and potentially audit.” Such penalties will be significantly reduced when taxpayers improve their returns.
What are your views on the tax rules for crypto investment in Australia? Let us know in the comments section below.
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