The ATO’s new powerful data matching technology has, to date, been more focussed on financial transactions via financial institutions. That technology is now turning its attention to Australian’s trading in cryptocurrency and investors should expect a letter from the ATO regarding their investments.
The ATO has announced that it will begin collecting data from Australian cryptocurrency designated service providers on an ongoing basis. This is to make sure that people trading in the cryptocurrency are paying the right amount of tax.
It is estimated that there are up to 1 million Australians who have invested in crypto-assets and the purchase and sale data of these transactions will now be available to the ATO. It also has the added benefit of helping to help identify serious black economy fraud and evasion.
Bitcoin and other cryptocurrencies are considered to be property for tax purposes in Australia and as such, the profit from this trade may be liable for capital gains tax.
Deputy Commissioner Will Day said the ATO’s use of third-party data would better identify taxpayers who fail to disclose their income details correctly.
“We are looking at whether the taxpayer has omitted capital gains on the sale of cryptocurrencies,” Mr Day said.
Mr Day said following the data-matching exercise, people may be contacted by the ATO and will be given at least 28 days to clarify any information that has been obtained from the data provider.
He said penalties may be significantly reduced in circumstances where the agency was voluntarily contacted prior to an audit.
If you, or someone you know, would like more information regarding the tax implications for investing in and trading cryptocurrencies , please contact John Kalachian on 02 91267 0108
