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Australian tax authority issuing audit warnings to local crypto traders

By:
on Mar 11, 2020
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  • Australian Taxation Office (ATO) has started contacting local crypto traders, reminding them of their obligation to pay taxes on gains made by trading crypto.
  • The tax office announced the move last year after noticing that many have failed to report such gains, either due to the lack of awareness or in hope that ATO will not uncover it.
  • Now, the tax authority started sending emails and post letters with which it hopes to raise awareness and give traders the opportunity to fix their mistake on their own.

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The Australian tax authority, ATO (Australian Taxation Office) has issued a warning to local cryptocurrency traders who may have been active in the last several years. The warning reminds the traders of their tax obligations for cryptocurrencies.

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At the moment, the regulator itself is in the process of reaching out to crypto traders and reminding them of their obligations personally, with plans to reach as many as 350,000 of them over the course of the next two months. Traders can expect contact via post letters or email, similarly to what the IRS did last year in the US.

Australian crypto traders failing to pay crypto taxes

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In Australia, cryptocurrencies are considered a ‘form of asset,’ which makes them subject to taxation. In other words, crypto traders are obligated to pay taxes on any gains they may have earned while trading digital currencies. As such, they are also required to fully disclose the information about their earnings to the tax authority.

ATO spokesman stressed that it is important for crypto traders to make sure that they keep and provide good records of their activities in order to avoid confusion and difficulties while paying their taxes.

They should make sure to keep transfer or purchase receipts, crypto exchange records, and to take note of all transaction dates. Further, they should keep digital wallet keys and records, as well as records of legal costs, accountants, and the purpose of transactions, but also the name or ID of the other party. Finally, they should also note the value of the coins in Australian dollars at the time when the transactions took place.

The crackdown itself was announced in 2019 when the ATO noticed that taxpayers are not reporting gains from crypto trading. The agency’s spokesman said that some traders may not have been aware of their tax obligation due to the lack of clarity regarding cryptocurrencies and that ATO is currently trying to raise awareness and give traders the chance to fix their mistakes on their own.

The ATO is contacting those who may have traded cryptocurrencies in 2017/2018, and it will request that traders review their gains and make sure that they have reported them properly. Failing to do so will result in an audit from the tax office itself. There are also some suspected on not reporting their gains from crypto trading on purpose, who were likely expecting that the tax office will not find out about their earnings as they were made online, which is, obviously, not correct.

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