As we anticipated, the ATO has released a media statement explaining that it is collecting cryptocurrency trading records dating as far back as 1 July 2014. The intention is to use those records as a “key element in the ATO’s compliance program”.
What information does the ATO have on cryptocurrency trading?
Together with your name and other personal information, the ATO is collecting, amongst other things:
- Details of cryptocurrency bought and sold (date, crypto/token name, amount, $ value)
- Associated wallet addresses
- Other unique identifiers
We can expect the ATO to use these records to perform data matching and chain analysis to track further movements in your cryptocurrency activities.
Ultimately, what this means is that Australian cryptocurrency investors and traders can expect to be contacted by the ATO. In particular, for those who have failed to comply with the tax law, there is a fair chance of severe penalties.
For example, if Alice has bought or sold cryptocurrency then the ATO will collect those records to identify her. The ATO will then likely perform an analysis to estimate whether she has cryptocurrency taxable gains. The ATO will check her tax return to determine whether or not she has declared cryptocurrency profits. The ATO is then likely to send Alice a letter which briefly explains what the ATO knows and this then gives Alice notice to, where necessary, respond or update her tax return.
If the ATO estimate that you have incorrectly reported cryptocurrency gains, failure to update your tax return will likely lead to a default assessment. You don’t want this to happen!
Once the ATO has issued a default assessment, you must not only prove the ATO has got it wrong, you must also prove what is correct. You could be faced with the situation where the ATO has over-estimated your cryptocurrency profits – meaning you are liable for more tax than you would have if you had correctly declared crypto gains. If you fail to prove what is correct, then even though you may be able to show that the ATO has over-estimated your gains, you will still be liable to tax on the over-estimation. You can see why you don’t want this to happen.
In addition to unpaid taxes, the ATO can apply hefty penalties and interest charges.
What should you do?
Our advice to you, as it has always been, is play it smart by talking to us now so we can get you the best possible tax outcome, legally.
As it states on our homepage, we’re on a mission passionately working every day, on every project, to reduce tax as much as legally possible – keeping your hard earned wealth in your wallet.
We’ve dealt with hundreds of Australian crypto investors, processed thousands upon thousands of cryptocurrency transactions and each time we have used our extensive knowledge to achieve great tax results for the benefit of our clients.
Last year, our Associate Director presented to a live audience in Perth, explaining that we’re here to help you legally minimise tax on cryptocurrency using Smart Tax saving methods developed in-house by Munro’s.
Don’t risk it - let us use our Smart Tax saving methods for your cryptocurrency tax return.
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