ATO puts cryptocurrency traders on notice ahead of tax time, warning of penalties

Cryptocurrency traders who think they’re living in a faceless high-tech world will soon get a letter from the tax office.

Australian Taxation Office data has captured a dramatic increase in trading since the beginning of 2020.

More than 600,000 taxpayers are now dabbling in crypto-assets, the ATO has found.

Taxpayers with crypto will be slugged with penalties and audits if gains are not declared at tax time.

“We are alarmed some taxpayers think the anonymity of cryptocurrencies provides a licence to ignore their tax obligations,” Assistant Commissioner Tim Loh said.

“While it appears 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.”

The ATO then matches data to tax returns to make sure investors are paying the right amount of tax.

The tax office will be writing to about 100,000 taxpayers with cryptocurrency assets explaining their tax obligations and urging them to review their previously lodged returns.

The ATO also expects to prompt almost 300,000 taxpayers as they lodge their 2021 tax return to report their cryptocurrency capital gains or losses.

Businesses or sole traders paid cryptocurrency for goods or services will have these payments taxed as income based on the value of the cryptocurrency in Australian dollars.

Source: 7news.com.au