INTHEBLACK November 2021 - Magazine - Page 28
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28 ITB November 2021
CRYPTO CRACKDOWN
The ATO estimates more than 600,000 Australian
taxpayers have invested in crypto assets in recent
years, some of whom have failed to declare their
capital gains.
“While it appears that 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,”
warns Tim Loh, ATO’s assistant commissioner.
The ATO has had a data-matching program in place
to track cryptocurrency transactions since early 2019,
and receives bulk records from Australian-designated
service providers as part of the program.
Data provided to the ATO includes cryptocurrency
wallet information, including names and addresses,
bank details and transaction information in relation
to purchases, sales and transfers.
The ATO also uses information collected from
international tax jurisdictions, including Common
Reporting Standard and Fair and Accurate Credit
Transactions Act in the US, as well as data collected
through the double tax agreements, to identify when
cryptocurrency transactions are converted to a foreign
currency or repatriated back to Australia.
“This year, we have written to about 100,000
taxpayers with cryptocurrency assets explaining
their tax obligations and urging them to review
their previously lodged returns,” the ATO says.
“We also expect to prompt more than 500,000
taxpayers as they lodge their 2021 tax return to review
their cryptocurrency transactions and correctly report
any capital gains or losses.”
ADVICE ON CRYPTO ASSETS
Even though the technology behind cryptocurrencies
is innovative and new, the tax laws that apply are
well established under capital gains tax provisions for
cryptocurrency investors.
Registered tax agents can help clients to understand
that cryptocurrencies purchased as a financial
investment are considered to be a form of property
and therefore an asset for CGT purposes.
CGT events are usually characterised by a change in
ownership. Like other investments in assets, ordinary
income may also arise from certain cryptocurrency
transactions, such as staking rewards and airdrops.
There are other circumstances where the ordinary
income rules apply, and this includes where the client
is conducting a cryptocurrency trading business. In
this case, the trading stock rules apply, and not the