Australian tax authorities have announced that they are going to send out letters to hundreds of thousands of cryptocurrency holders, asking them to report their earnings and profits on their yearly tax returns. This is similar to a similar move that was made by the UK tax authorities in April, which has already prompted over a thousand cryptocurrency holders to report their profits.
The Australian Taxation Office (ATO) has announced that it will be mailing more than 400,000 cryptocurrency holders to remind them of their tax obligations going back as far as 2015. The tax letter is part of the ATO’s first phase of efforts to crack down on tax evasion in the midst of Australia’s increasing number of cryptocurrency investors.
The Australian Tax Office (ATO) is set to prompt 400,000 cryptocurrency holders to report their gains. This is a result of the data provided by cryptocurrency exchange CoinSpot. The tax agency will use this data to contact taxpayers who made profits from virtual currency trades between July 1, 2017 and December 31, 2017.The Australian Taxation Office has reminded a growing number of cryptocurrency investors of their tax obligations. To counter the common misconception that gains from cryptocurrencies are only taxed when the coins are exchanged for dollars, the IRS plans to ask hundreds of thousands of taxpayers to report gains and losses from cryptocurrency transactions.
IRS targets Australians with crypto-currency debt
Concerned that cryptocurrency investors are evading tax, the Australian Taxation Office (ATO) is debunking the myth that profits from cryptocurrencies are only taxable when the digital assets are converted into fiat currency. People often think of digital coins as currencies, but in reality they are classified as assets and the profits from trading cryptocurrencies are similar to other investments, the tax department explained. The ATO estimates that 600,000 Australians have recently invested in cryptocurrencies, given the growing popularity of cryptocurrency trading and rising market prices. The agency will now send warning letters to 100,000 taxpayers asking them to review their already-filed tax returns. Another 300,000 Australians will have to report their profits and losses from crypto currency transactions when they file their tax returns in 2021, Australian media reported. The IRS also said it is closely monitoring interactions between cryptocurrencies and the fiat system, facilitated by both the traditional financial sector and the crypto industry. According to ATO deputy commissioner Tim Loh, who also spoke to news.com.au, the agency tracks taxpayer refunds through data matching profiles with crypto-currency exchanges: There’s no hiding place here. We have that information and we just ask people to follow the rules. We know that most Australians follow the rules.
Australian capital gains tax also applies to NFTs, warns ATO
The ATO official further clarified that the tax authorities treat income from cryptocurrencies in the same way as income from stocks, for example. Not only when an investor exchanges cryptocurrencies for fiat currency, but also when one currency is exchanged for another, these transactions must be reported. In addition, the Australian capital gains tax also applies to the sale of non-playable tokens (NFT), Tim Loh said. At the same time, holding crypto funds as a long-term investment, for 12 months or more, entitles taxpayers to a refund. Another rule applies when businesses or self-employed individuals receive cryptocurrencies for the goods and services they provide. These payments are taxed as income based on the value of the digital coins, calculated in Australian dollars. The ATO recognises that this is a complex issue and is now working to help Australians complete their tax returns correctly. Tim Loch advised: The best advice for recording your profits and losses with crypto currency is to keep accurate records, including the date of the transaction, the Australian dollar value at the time of the transactions, the purpose of the transactions, and the identity of the other party, even if it is just the wallet address. It can also be inferred from Loch’s comments that the Australian Taxation Office considers failure to declare debts to be a more serious sin than misclassification. Failure to report crypto assets and follow up on reminders will result in fines and possibly an audit, the tax attorney warns. These penalties are greatly reduced when taxpayers correct their tax returns. What do you think about the tax rules for investing in cryptocurrencies in Australia? Let us know your comments in the section below.
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Agency, ATO, Australians, Australia, Australian Taxation Office, capital gains, crypto currency, crypto trading, crypto currency, returns, exchange, profits, letters, losses, NFTs, profits, tax, tax authority, IRS, tax returns, taxes, transactions Photo credit: Shutterstock, Pixabay, Wiki Commons Denial: This article is for information only. It is not a direct offer or invitation to buy or sell, nor is it a recommendation or endorsement of any goods, services or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author shall be liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services referred to in this article.The Australian Tax Office (ATO) has announced that it will contact approximately 400,000 cryptocurrency holders in an attempt to get them to report their tax obligations. The Australian Taxation Office (ATO) has issued letters to cryptocurrency investors in a move that is meant to increase the amount of tax that is paid by cryptocurrency investors. The ATO has said that it will be contacting approximately 800,000 investors by the end of 2017, with around 400,000 of these being cryptocurrency investors.. Read more about ato cryptocurrency reddit and let us know what you think.
Frequently Asked Questions
How do I report crypto gains on my taxes?
The Australian Tax Office (ATO) is urging all crypto holders to report their cryptocurrency gains, after it found that more than 8 percent of Australians with a taxable income have not reported cryptocurrency holdings. The ATO has previously called for crypto holders to declare their cryptocurrency gains, and has taken action against a number of cryptocurrency traders. In July 2017, the Australian government introduced new legislation implementing the recommendation of the Senate Economics References Committee, which found that the government should “ensure that the ATO has the powers and resources to monitor the use of digital currencies and to ensure the appropriate taxation treatment of digital currency transactions.” The Australian Taxation Office (ATO) has since advised that it will seek information on all bitcoin transactions that have taken place since 1 July 2017. This includes any amount that has been mined, bought, sold, or traded for any other digital currency.
Can the IRS track Cryptocurrency?
The IRS has long since begun the process of monitoring and taxing cryptocurrency, and they will even be using it to hunt tax cheats. Cryptocurrency is still a rather murky aspect of the US economy, and the IRS is trying to figure out how to regulate it. With the massive amount of taxes that can be collected from cryptocurrency, the IRS is setting their eyes on the most popular cryptocurrencies such as Bitcoin, Ethereum, and others, in order to track down potential tax cheats. Cryptocurrency is a digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of this security feature. A defining feature of a cryptocurrency, and arguably its most endearing allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.
Does Coinbase report to HMRC?
On Monday, February 18th, the Australian Tax Office announced that it would be forcing roughly 800,000 Australian citizens to report their cryptocurrency holdings to the Australian Taxation Office (ATO). The move has been criticized by some, as it will undoubtedly cause a significant amount of uncertainty within the cryptocurrency space, while also possibly deterring new cryptocurrency investors from entering the space. The announcement comes as a result of the ATO’s cryptocurrency guidance paper from July of last year, which stated that Australians who purchased cryptocurrencies in the past were legally required to report their gains if they were considered to be “business assets.” Coinbase has provided an official statement on whether it provides information to the HMRC (HMRC = Her Majesty’s Revenue & Customs). The digital asset exchange responded to the question as part of a thread on Reddit, which asked whether Coinbase provided information to tax agencies if requested. In its response, the exchange claims that it provides the minimum required information to the HMRC to fulfill its “legal obligations.”
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