- The Australian Taxation Office has sent reminders to crypto investors of their tax obligations
- The office has sent letters to 100,000 taxpayers reminding them that tax is due on crypto-crypto transactions as well as crypto-fiat transactions
- The tax office says that some 600,000 Australians have engaged in crypto investing in the past tax year
The Australian Taxation Office (ATO) has sent reminders to those it suspects of making heavy cryptocurrency gains that they need to declare their gains in their tax return. In the past week the ATO has sent around 100,000 letters to taxpayers reminding them of their obligations and urging them to check previous filings. This number could rise to 400,000 as 2020/21 filings are lodged, with many not seeming to realize (or intentionally ignoring the fact) that the ATO charges tax on profits made in crypto-to-crypto transactions and not just when cryptocurrency is converted to fiat.
ATO “Concerned” That Crypto Traders Don’t Understand Rules
In a note published on the ATO website, the office reminds crypto investors that it is “concerned that many taxpayers believe their cryptocurrency gains are tax free or only taxable when the holdings are cashed back into Australian dollars.” Instead, as with many countries, tax must be calculated and paid on gains made through all cryptocurrency transactions, even if none of that was converted back into fiat.
Over 600,000 Suspected of Crypto Activity
The ATO estimates that over 600,000 Australians have been dabbling in cryptocurrency trading in the past tax year, and with the crypto market enjoying a huge boom in that time the ATO is expecting an increase in capital gains tax as a result. Assistant Commissioner Tim Loh explained in the web post that the ATO was on top of monitoring missing tax:
We are alarmed that some taxpayers think that the anonymity of cryptocurrencies provides a licence to ignore their tax obligations. While it appears that cryptocurrency operates in an anonymous digital world, we closely track where it interacts with the real world through data from banks, financial institutions, and cryptocurrency online exchanges to follow the money back to the taxpayer.
As with most tax authorities, the ATO states that honest mistakes are punished less harshly than intentional tax avoidance, which is why the ATO is advising anyone who may have misreported their prior crypto earnings to re-file while they have the chance.