Australia’s tax authority, the Australia Taxation Office (ATO), is planning to contact thousands of Australian crypto traders to remind them of their tax obligations. The move is in line with the ATO’s aim to clampdown on crypto tax offenders.
350,000 Bitcoin Traders to Receive Warning from the ATO
According to a report by a local news outlet, News.com.au, the ATO would be sending series of warnings to about 350,000 crypto traders in Australia, via emails or letters. The tax agency noted that some bitcoin traders could be unaware of their tax debts, but was willing to give virtual currency taxpayers time to sort themselves.
Speaking to the news outlet, a spokesperson for the ATO said:
“For other taxpayers where we can see they hold cryptocurrency, but may not have sold or traded any during the (financial) year, we will be writing to them to remind them of their tax obligations and the records they should keep. 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.”
Also, the ATO regards digital currencies as property, which means that they fall under capital gains tax. Furthermore, the onus of accurate tax reporting falls on bitcoin investors, as they are expected to keep records of all transactions. Such records include transaction dates, parties involved in the transaction, the reasons for carrying out the transactions, etc.
The ATO spokesperson added the tax authority will send reminders to Australian taxpayers involved in crypto trading between 2017 and 2018, asking them to check their returns to ensure proper reporting of capital gains on trading.
Accurate Tax Reporting Beneficial for Crypto Traders
Director of tax communications at U.S. tax preparation company H& R Block, Mark Chapman, also stated that the ATO had been conducting investigations into irregularities in tax returns since 2019. Chapman further revealed that some of his clients received emails from the tax agency notifying them of the discrepancies and an opportunity to “self-correct” them.
Furthermore, the H & R Block executive noted that about a million Australians were involved in digital currency trading, and added that while some taxpayers got into virtual currency without knowing the tax implications, others deliberately refused to report crypto transactions.
According to Chapman:
“It is very much a virtual transaction, so some people out there have assumed the ATO couldn’t follow the money, which is obviously not correct. The ATO gets information directly from these cryptocurrency exchanges.”
The tax expert continued by saying that it was not financially advisable for crypto holders to avoid accurate tax reporting, as the formal audit process could be costly.
Crypto traders have been under the spotlight of the ATO for a long time, with the tax authority doing everything in its power to prevent virtual currency traders from evading taxes. There have also been reports of exorbitant crypto tax rules in Australia Back in May 2019, the ATO assembled data from DSPs in the country to ensure that individuals were correctly reporting crypto holdings.
In August 2019, the ATO sent out warning letters to retirees in Australia about the risks of investing in virtual currency.
As previously reported by BTCManager in 2019, the U.S. tax agency, the Internal Revenue Service (IRS) also sent out 10,000 warning letters crypto traders. Recently, the IRS met with crypto stakeholders to discuss crypto tax laws.