Australian Taxation Office (ATO) deputy commissioner Tim Loh said his office was “alarmed” about the situation.
The Local Internal Revenue Service (ATO) has issued a statement. Calling on all traders to report income generated from digital currency transactions.
Moreover, the department stressed that those investors are mistaken who think that their income cannot be tracked if they don’t convert digital currencies into Australian dollars.
Traders have to pay taxes in any case, even if a trader buys one cryptocurrency and purchases another. According to the ATO, in Australia, about 600,000 traders regularly operate on the crypto market.
Internal Revenue Commissioner Tim Loch noted that traders do think that due to the anonymous nature of cryptocurrency, it is impossible to track the profitability of transactions. A spokesman for the department said tax officials get the information they need by comparing data from digital asset exchange services. Including exchanges, with declarations filed by individuals.
What income is taxed?
Traders need to pay taxes not only on income received from operations with Bitcoin or other cryptocurrencies, but also on transactions with so-called Non-fungible tokens (NFT).
Under Australian federal law, cryptocurrencies taxed as a form of ownership and subject to the same rules as capital gains. Non-fungible tokens (NFTs), which surged in popularity this year, also considered taxable capital gains on sale.
Traders must submit reports by October 31 of the current year. About 100,000 traders will receive a letter from the Internal Revenue Service. With a request to revise the data they indicated in their previously filed declarations. The IRS will also ask about 300,000 people to file their 2021 tax return to report their profits or losses from cryptocurrency transactions.
This is not the first time ATO has sent notifications to potential offenders
ATO notices for potential criminals seeking to hide or evade their duty to pay cryptocurrency taxes are a familiar battleground for the department.
This is not the first time ATO has sent notifications to potential offenders who haven’t paid tax on cryptocurrency transactions. Back in 2018, the regulator issued a warning to traders. Requiring them to declare their profits in cryptocurrencies when filing an annual income tax return. In 2019, the agency announced its intention to supervise the cryptocurrency transactions of citizens to identify unscrupulous taxpayers.
Last year, the ATO issued a similar warning to hundreds of thousands of residents. And said the agency has the ability to roll out its data-matching protocol for cryptocurrencies. This allows the tax inspector to verify the data on individuals with the data provided by cryptocurrency exchanges. Earlier, Australia’s Minister of Financial Services Jane Hume said that “the government is not against investing in cryptocurrency. But investors must “obey Australian laws, including market behavior, KYC and tax laws”.