Australia’s revenue service has reminded a growing number of crypto investors about their tax obligations. Rejecting the common misconception that crypto gains are only taxable when coins are cashed back into dollars, the tax office is going to prompt hundreds of thousands of taxpayers to report profits and losses from their cryptocurrency transactions.
Tax Office Targets Australians With Crypto-Related Obligations
Concerned about crypto investors evading taxes, the Australian Taxation Office (ATO) has set out to debunk the myth that cryptocurrency gains are only taxable when digital assets are converted into fiat money. People often think the digital coins are currencies but in reality, they are classified as assets, and gains from cryptocurrency trades are like gains from other investments, the tax authority explained.
ATO has estimated that 600,000 Australians have invested in cryptocurrency recently amid the surging popularity of crypto trading and rising market prices. The agency is now going to send warning letters to 100,000 taxpayers asking them to review their previously filed returns. Another 300,000 Aussies will be prompted to report their gains and losses from cryptocurrency deals as they lodge their 2021 tax return, Australian media reported.
The tax office also revealed that it’s closely monitoring the points where cryptocurrency interacts with the fiat system, helped by both the traditional financial sector and the crypto industry. The agency tracks the money back to the taxpayer using data matching profiles with cryptocurrency exchanges, according to ATO Assistant Commissioner Tim Loh who also told news.com.au:
There isn’t a game of hide and seek. We have got that information and all we are asking people to do is follow the rules. We know most Australians follow the rules.