Cryptocurrency investments are on the ATO’s radar this tax return season, with 100,000 taxpayers to be alerted by the ATO of their tax obligations from their cryptocurrency investments this financial year.
It’s an outcome that has resulted from a growing concern that many taxpayers who invest in cryptocurrency believe their gains to be tax-free, or only taxable when their holdings are cashed into Australian dollars.
This proactive prompt to taxpayers is a repeat of the ATO’s 2020 attempt, which resulted (after contacting 100,000 taxpayers) in the lodgement of 140,000 returns.
Cryptocurrency’s current popularity as an investment solution for many taxpayers, due to the fairly consistent returns, is causing the ATO to evaluate the digital asset’s tax implications further.
Currently, those who invest in cryptocurrency need to be aware of the capital gains tax implications that may eventuate from selling or buying and any losses or gains that may come about due to investing, particularly in how it impacts their reportable income tax.
The ATO will also be heading into tax time with access to more data and the ability to track those investing in crypto-assets and ensure they are meeting their tax obligations.
The best way to ensure that your tax returns are lodged correctly when it comes to cryptocurrency reporting is to keep immaculate records. You should ensure that you have records of:
- Dates of transactions
- The value of the cryptocurrency in Australian dollars at the time of the transaction
- What the transactions were for
- Who the other party was (even if it’s just their wallet address)Be sure that you are meeting your tax obligations this tax return season (especially to avoid the harsh penalties resulting from incorrect reporting or lodgements) by speaking with us. We can advise you further about your particular situation and give you the advice you need to suit your circumstances.