The Australian Tax Office (ATO) is starting to bust cryptocurrency tax dodgers after more than 600,000 Aussies invested in digital currencies recently.
Talking to news.au.com, ATO’s assistant commissioner, Tim Loh said that the federal tax office is ‘alarmed’ as many crypto investors have the false perspective that the anonymity in cryptocurrencies will help them bypass tax obligations.
He revealed that the tax agency is tracking cryptocurrency transactions using the data collected from banks, financial institutions and cryptocurrency exchanges.
“[We] follow the money trail back to the taxpayer, and we do that through the ATO which has data matching profiles with cryptocurrency exchanges, and they provide that information to us, and we use that information to cross-match with people’s tax returns,” Loh said.
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Sending Mass Notices
The agency will ask around 100,000 taxpayers holding cryptocurrency to review their previous tax returns and ensure the declared incomes were correct. Additionally, another 300,000 taxpayers with crypto investments will be notified to declare crypto gains and losses in 2021 tax returns.
Australia sees cryptocurrencies as assets, meaning the traders only need to pay capital gains taxes when they liquidate their crypto holdings. In addition, the ATO pointed out that it sees the recently boomed non-fungible tokens as assets.
The ATO issued similar warnings last year to many potential tax dodgers. Loh revealed that the agency notified around 100,000 taxpayers and prompted 140,000 taxpayers at lodgement.
“There isn’t a game of hide and seek. We have got that information, and all we are asking people to do is follow the rules. We know most Australians follow the rules,” Loh said.
“The best tip to nail your cryptocurrency gains and losses is to keep accurate records including dates of transactions, the value in Australian dollars at the time of the transactions, what the transactions were for, and who the other party was, even if it’s just their wallet address.”