Australian Tax Office Urges Users to Report Profit from Cryptocurrencies

The Australian tax agents now want taxpayers to provide detailed records of their cryptocurrency transactions. They also aim to get income records related to sharing economy platforms like Airbnb and Uber.

Closing a multi-million-dollar tax gap

The revenue service is already reaching out to hundreds of thousands of taxpayers in the country via email and mail and trying to remind them of their tax obligations arising out of trading cryptocurrencies. According to the Australian Taxation Office (ATO) spokesman, people who sold crypto holdings during the financial year 2017/18 may be asked to review their tax returns.

He said that people who fail to correct their tax obligations will be audited and will have to face penalties as well. The spokesman added,

“Over the next two months we expect to contact as many as 350,000 individuals who have traded in cryptocurrency in the last few years.”

What about people who didn’t sell crypto?

Taxpayers who didn’t trade their cryptocurrencies i.e. held on to their coins, will be updated soon about the information that they need to collect regarding their holdings. The tax agency is asking users to maintain detailed records of their transactions, including receipts of purchase and transfer of cryptocurrency, the exchange and digital wallet records alongside the time, dates and values of all transactions in Australian dollars. They might also be asked to define the purpose of each transaction so they can identify other parties involved.

Australia applies the capital gains tax on all financial gains from exchanging and trading cryptocurrencies and from converting it into fiat currencies- whether local or foreign. It considers crypto property for tax purposes. More recently, Australian authorities have launched broader efforts to regulate the cryptocurrency space. It has allowed over 300 registered crypto exchanges to run in the country. Recently, a court ruling described cryptocurrencies as recognized investment methods as well.

The ATO is getting information about crypto traders from exchanges and details taxation for digital assets in detail on its website. In 2019, it published the Cryptocurrency Data Matching Protocol which covered financial years between 2014/15 and 2019/20. It has helped the authorities receive transaction data from crypto exchanges and allow crypto traders to fix mistakes they could have made in their tax filings. The agency suggests that many people who have bought and sold cryptocurrencies may not be aware of their tax liabilities.