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Australian tax agents have set out to close a gap they say costs the state several billion dollars. Taxpayers who file various work-related claims and investment property deductions or declare income from sharing economy platforms such as Uber and Airbnb may be asked for explanations and receipts. Investors and traders earning income from cryptocurrencies are also among the targeted.
Crypto Investors Advised to Keep Detailed Records of All Transactions
The revenue service has started contacting hundreds of thousands of Australians via mail and email to remind them of the tax obligations that come with cryptocurrency trading. A spokesman for the Australian Taxation Office (ATO) told News.com.au that people who sold cryptocurrency during the 2017/18 financial year may be asked to review their tax returns. Those who fail to correct any established discrepancies can be audited and risk penalties. The official stated:
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.
Taxpayers who only held crypto but didn’t trade will be updated about the information they are required to gather. Investors should keep detailed records including receipts of purchase or transfer of cryptocurrency, exchange and digital wallet records, the date and the value of each transaction in Australian dollars at the time it took place. They should also be able to explain the purpose of each transaction and identify other involved parties.
Financial gains from trading and exchanging crypto as well as from converting it into local or foreign fiat is subject to capital gains tax in Australia, where cryptocurrency is considered a property-like asset for tax purposes. The country has advanced in its efforts to regulate the crypto space further than other nations. It has over 300 registered digital asset exchanges, as news.Bitcoin.com reported last month. A recent court ruling added another layer of legitimacy describing cryptocurrencies as “a recognized form of investment.”
ATO Gets Its Information From Cryptocurrency Exchanges
The Australian Taxation Office has a dedicated page on its website that details the tax treatment of cryptocurrencies in the country. Last year, the administration published its Cryptocurrency Data Matching Protocol covering the financial years between 2014/15 and 2019/20. The program was introduced to obtain transaction data from exchanges on taxpayers who have bought and sold cryptocurrency, the ATO representative pointed out and further commented:
Our campaign is designed to help raise awareness and give people the opportunity to fix any mistakes.
The tax service has estimated that up to a million people in Australia have bought and sold cryptocurrency. Many of them might not have realized the tax implications and simply failed to report the profits on their tax returns. Others may have thought that the ATO does not have the means to track these transactions which are conducted online and often involve foreign currency. As the agency now gets its information directly from cryptocurrency exchanges, however, this assumption does not hold up.
What’s your opinion about the tax campaign targeting crypto investors in Australia? Share your thoughts on the subject in the comments section below.
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