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The ATO stated that it is already aware of who is investing in cryptocurrency and anticipates cooperation.
The Australian Taxation Office has asked individuals to appropriately disclose any gains gained from trading cryptocurrencies such as Bitcoin (BTC), anticipating tax submissions from a pool of 600,000 Australians who it currently thinks are invested in digital assets.
The ATO’s assistant commissioner, Tim Loh, told News.com.au that people still make the mistake of treating crypto like a currency as opposed to an asset. The ATO wants to rid citizens of the myth that cryptocurrency profits are tax-free, or that they only need to be declared when cashing back out to fiat money.
Loh said the tax office was already aware of who is invested in cryptocurrency thanks to the cooperation it has received from exchanges and banking institutions.
“(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.
“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,” he added.
Loh expressed concern about some people’s willingness to disregard tax responsibilities acquired in the cryptocurrency realm. In 2021, the ATO will contact 400,000 Australian individuals to remind them to examine their previously filed tax returns and to declare capital gains or losses on cryptocurrency exchanges.
In terms of preserving proper tax records, Loh said that the ideal approach would be to record every transaction in Australian dollars, noting dates, hours, and wallet addresses.
“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,” said Loh.