The Australian Tax Office is said to have issued audit warnings to the general Australian public based on taxes associated with dealing in cryptocurrencies. According to the tax collectors, about a million Australian residents are estimated to be dealing in cryptocurrencies, either by means of trading, or other numerous ways.
The news became public following a report that a spokesman of the taxation office said in an interview that the agency was in the process of contacting the hundreds of thousands of Australian residents who are obliged to pay taxes on their cryptocurrency earnings.
ATO To Send Audit Warnings To Over 350,000 Tax Payers
According to the spokesman, the ATO is in the process of contacting up to 350,000 individuals either by letter or email to “remind them” of their tax obligations when they trade in cryptocurrency, such as bitcoin.
Cryptocurrencies are considered to be a form of property and therefore an asset for capital gains tax purposes.
That means any financial gains made from the buying and selling of cryptocurrencies will generally be subject to capital gains tax and must be reported to the ATO.
Examples include selling, trading or exchanging cryptocurrency, converting it into Australian dollars or a foreign currency or using it to obtain goods or services.
An ATO spokesman told news.com.au investors in cryptocurrency should ensure they keep good records when they buy, sell or trade cryptocurrencies to make it a lot easier come tax time.
Those records should include receipts of purchase or transfer of cryptocurrency, exchange records, records of agent, accountant and legal costs, digital wallet records and keys, the date of the transactions, the value of the cryptocurrency in Australian dollars at the time of the transaction and what the transaction was for and who the other party was.
The Tax Office Already Has A Record Of Tax Payers Dealing In Crypto
“In April last year we published our Data Matching Protocol for cryptocurrency. Under this program we obtain cryptocurrency transaction data from currency exchanges on taxpayers who have bought and sold cryptocurrency,” the ATO spokesman said.
“Using this data we’ve found that due to the complex nature of cryptocurrencies, some people may not be aware that there may be tax obligations, so our campaign is designed to help raise awareness and give people the opportunity to fix any mistakes.
You can read more about your obligations with respect to cryptocurrency on our website or if you use a tax agent, you can discuss your obligations with them.”