Report Your Crypto Gains and Losses; Australian Tax Office Warns Investors

The ATO on Friday disclosed it will be informing around 100,000 crypto investors to review their previous years’ returns and ensure they’re correct. The tax office noted before its decision, that investors and businesses are leveraging on the pseudo-anonymity or full anonymity of the cryptocurrency and blockchain technology to avert taxes. To this effect, through a Friday report, the ATO’s assistant commissioner Tim Loh sid his office was concerned that the anonymity of the cryptocurrencies is encouraging its uses to avert or ignore tax obligations. However, he noted the office is taking stringent actions to curtail tax aviation. 

The agency said it will inform around 100,000 taxpayers holding cryptocurrencies to review and ensure their declarations are correct. It also said it will be asking around 300,000 people to ledge their 2021 tax returns to report their cryptocurrency capital gains and losses. 

In his announcement, 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,” Ordinarily, cryptocurrencies including NFTs are taxable under Australian Federal Laws. On that note, Loh affirms; 

“(We) follow the money trail back to the taxpayer and we do that through the ATO which has data matching profiles with cryptocurrency exchanges,” Loh said. “They provide that information to us and we use that information to cross-match with people’s tax returns.”

Before the recent report, the agency has warned hundreds of thousands of residents, claiming it can deploy its Data Matching Protocol for cryptocurrencies. This allows the taxman to cross-check data on individuals with data provided by cryptocurrency exchanges.

Finally, Loh on behalf of the agency declared; 

“There isn’t a game of hiding and seek,” said Loh. “We have got that information and all we are asking people to do is follow the rules.”