The Australian Taxation Office (ATO) is urging Aussies to read up on the obligations and regulations around cryptocurrency and taxes.
The assumption that cryptocurrency gains are tax free or are only taxable when cashed back into Australian currency is not correct, the ATO says.
“We will be explaining their tax obligations and urging them to review their previously lodged tax returns,” says ATO assistant commissioner Tim Loh.
“We are alarmed that some taxpayers think that the anonymity of cryptocurrencies provides a license 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,” he says.
The ATO ensures investors are paying the right amount of taxes by matching data from cryptocurrency service providers to people’s tax returns.
Goods or services paid for using cryptocurrency will result in sole traders or businesses being taxed with these transactions as income, based on the Australian currency value of the cryptocurrency.
Investors may be entitled to a discount on capital gains tax (CGT) if they hold cryptocurrency for at least 12 months, however individual circumstances will apply.
For more information, visit www.ato.gov.au.