The Australian Tax Office has urged citizens to accurately report all profits from trading cryptocurrencies such as Bitcoin (BTC), anticipating tax returns from a group of 600,000 Australians who are now believed to have invested in digital assets.
ATO Deputy Commissioner Tim Loh told News.com.au that people are still making the mistake of treating cryptocurrencies as a currency rather than an asset. The ATO wants to rid citizens of the myth that cryptocurrency earnings are tax-free or that they only need to be reported when they switch to fiat money.
Loh said that Thanks to the cooperation between stock exchanges and banking institutions, the tax office already knew who was investing in cryptocurrencies.
“(We) track the money back to the taxpayer and do it through the ATO, which has data match profiles with cryptocurrency exchanges. They give us this information and we use that information to compare it to people’s tax returns,” Loh said.
There is no game of hide and seek. We have this information and all we ask people to do is obey the rules. We know most Australians obey the rules, he added.
Loh said he was alarmed by the willingness of some people to ignore tax obligations in the cryptocurrency world. The ATO will reach out to 400,000 Australian citizens in 2021 to urge them to review their previously filed tax returns and to report any capital gains or losses from their cryptocurrency operations.
Regarding the process of keeping accurate tax records, Loh said the best practice is to record every transaction in Australian dollars, making a note of the date, time and wallet address.
The best advice to determine your cryptocurrency gains and losses is to keep accurate records that include the dates of the transactions, the value in Australian dollars at the time of the transactions, the purpose of the transactions, and the person the other party is doing even if it’s just his wallet address, ”Loh said.