The Australian Tax Office has urged citizens to accurately report any profits made by trading cryptocurrencies such as Bitcoin (BTC) and anticipate tax returns from a pool of 600,000 Aussies it now believes are invested in digital assets .
ATO Deputy Commissioner Tim Loh told News.com.au that people are still making the mistake of treating crypto like a currency as opposed to an asset. The ATO wants to rid citizens of the myth that cryptocurrency profits are tax-free or that they only need to be declared when they are returned to fiat money.
According to Loh, the tax office already knew who’s invested in cryptocurrency thanks to the collaboration it has received from exchanges and banking institutions.
“(We) follow the money trail back to the taxpayer and do so through the ATO, which has data matching profiles with cryptocurrency exchanges and shares that information with us. We use this information to match it with people’s tax returns,” Loh said.
“There is no game of hide and seek. We have this information and all we ask people is to obey the rules. We know that most Australians obey the rules,” he added.
Loh said he was alarmed by some people’s willingness 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 request them to report capital gains or losses from crypto deals.
Regarding the process of keeping accurate tax records, Loh said the best practice is to record every transaction in Australian dollars, taking note of the date, time, and wallet address.
“The best tip for tracking your cryptocurrency gains and losses is to keep accurate records, including transaction dates, the value in Australian dollars at the time of the transactions, the purpose of the transactions, and whoever the other party was.” only that is your wallet address, ”Loh said.