Ethereum
$ 1,030.64 7.33%
Solana
$ 32.08 7.69%
Dogecoin
$ 0.064308 2.64%
ApeCoin
$ 4.37 6.28%
Bitcoin
$ 19,233.67 4.24%
BNB
$ 210.42 4.02%

Australian Tax Office targets crypto capital gains, among others

Australia
TL;DR Breakdown
  • The Australian Taxation Office (ATO) has announced that crypto capital gains are part of its areas of focus this year.
  • The new rules are part of a broader effort by the ATO to ensure people pay their taxes on income earned from crypto transactions.

The Australian Tax Office (ATO) has released a report this week outlining areas it will be focusing on in the coming year, including crypto capital gains. The agency announced its four priority areas for this year’s Tax Time on Monday, singling out crypto as a potential area of concern.

The taxation body revealed that nearly 70 percent of taxpayers who made a profit from selling cryptocurrency assets failed to declare it.

Remember, you can’t offset your crypto losses against your salary and wages,

ATO assistant commissioner, Tim Loh.

Loh noted that crypto capital gains are one of their top priorities adding that it’s vital that people keep records so they can work out how much tax they owe.

The ATO said they would also look at record-keeping, work-related expenses, and property-related deductions alongside capital gains from crypto, property, and shares.

Mr. Loh said the ATO would be looking at whether crypto investors had been correctly declaring their gains.

The ATO is aware that many Australians have made significant profits from cryptocurrencies but have not reported this income. […] We encourage anyone who has not previously lodged a return or included their cryptocurrency dealings to do so as soon as possible.

Defaulters will face criminal prosecution

The Australian Tax Office (ATO) received 2,878 individual income tax returns with crypto capital gains in the 2018–19 financial year, which ended in June 2019. Of these, only 622 were submitted correctly. The rest had either understated their profits or overstated their losses—or simply failed to report at all.

The taxation authority informs Australians that if a taxpayer does not make an adequate record of their transactions or does not record them correctly, they may be considered for criminal prosecution under Section 135(4) of the Tax Act, as well as being subject to penalties imposed under Section 136D(2).

The ATO noted that with the prices of most crypto assets suffering from significant losses this year, any sold crypto asset, including NFTs, needs to have a calculated capital gain or loss recorded with it. They will also be “taking firm action” to deal with taxpayers who try to falsify their records.

This news comes as a surprise, given that the ATO has been relatively quiet about the industry over the past few years. In fact, there was little talk about cryptocurrency until last month when the Australian Securities and Investments Commission (ASIC) announced that it would begin investigating potential scams targeting investors in these currencies.

While this move sounds promising for those hoping to see more regulations placed on cryptocurrencies, it also raises some concerns about how effective they will be at curbing illegal activity in this area.

Australian Tax Office, in unison with the Australian Securities and Investments Commission

Australia’s approach to cryptocurrency is a bit unique compared to other countries—it doesn’t have a single regulatory body for cryptocurrency regulation like Japan does, for example, so each state has developed its approach. In December last year, the Australian Securities and Investments Commission (ASIC) issued guidance stating that cryptocurrencies should be treated as assets for capital gains tax purposes. The ATO also says it plans to work with ASIC on joint initiatives around crypto taxation this year.

Some analysts have argued against increased regulation because they believe it could stifle innovation and growth within this space. However, others point out that we could see even more scams perpetrated against investors without regulations like these.

The Australian Taxation Office has already collected information from cryptocurrency exchanges since 2017. Still, now it will expand its reporting requirements to include businesses that offer crypto-to-fiat currency exchange services and custodial wallets.

The new rules are part of a wider effort by the ATO to ensure people pay their taxes on income earned from crypto transactions. The agency also intends to clarify regulations for those who trade in cryptocurrencies and businesses that accept them for goods or services.

The ATO has also warned that there are still many risks associated with investing in cryptocurrencies. These include high volatility and the possibility of hacking and theft by hackers.

Nellius Irene

Nellius Irene

Nellius Irene is a cryptocurrency investor and journalist who has been in the nascent space since 2018. She has researched and written on several crypto-related topics including non-fungible tokens (NFTs), decentralized finance (DeFi), fundraising, mining, etc. Her major focus is covering regulatory events that are capable of shaping the entire crypto ecosystem.

Related News

Hot Stories

Ethereum price analysis: ETH drops further, swiftly looks to break $1,000?
Famous Tiktoker Khaby Lame becomes Binance Web3 global ambassador
NFT Company OpenSea cautions users on email phishing following a data breach
Grayscale in court challenging SEC on rejecting Spot Bitcoin ETF
Solana price analysis: Bears push downtrend, demoting SOL down to $32

Follow Us

Industry News

CoinFlex CEO announces a shift in withdrawal date
Three Arrows could be liquidated due to the crypto market's bearish streak
Ronin bridge returns online after hack
Compass Mining loses Bitcoin mining facility for neglecting energy bill
Robinhood shares spike 14% on FTX rumored purchase report