Australian Taxation Office (ATO) has cautioned Australian crypto traders and investors, asks them to declare profits in their annual returns, as cryptocurrencies are considered as property in Australia, according to the Australian Financial Review reported today (i.e. 18th Dec’18).
Cryptocurrencies are no more currencies, as they come under the property tax for residents of Australia. ATO said that cryptocurrency investors and traders are liable for the capital gain tax when cryptos were sold for a profit after July 2017.
However, ATO has exempted tax for personal use, including to assets worth less than $10,000, which are saved for personal use or enjoyment.
ATO spokesperson said to Australian Financial Review (AFR) that they have increased investor transparency and have created Australia’s counter-terrorism financing and anti-money laundering laws. The digital currency exchanges should register with Australian Transaction Reports and Analysis Centre.
The counter-terrorism financing and anti-money laundering laws are being used beside the ATO’s data matching technology and a range of current powers.
The spokesperson of ATO also stated to Australian Financial Review that:
“While there is no specific label on the capital gains schedule or income tax return to determine how many people have invested in cryptocurrency we are still watching at lodgement activity this year to determine any significant impact of cryptocurrencies.”
Since errors relating to income from cryptocurrency, foreign-sourced income, and sharing economy are among the most common tax mistakes, ATO is keeping a close eye on such transactions.
The Australian taxpayers who are considering how to report their profits made from cryptocurrency activities to the ATO should follow simple rules and steps, which includes keeping records of the date of their transactions, the total amount in Australian dollars, the purpose of the transaction done for and the other party involved in the trade.
The ATO also advises taxpayers to keep records of traders’ wallet addresses and other information. The spokesperson of ATO said, “Records can often be easily accessed from digital currency exchanges or from the wallets which were used to make the transactions.”
The Australian Government has published ATO Goods and Services Tax (GST) for businesses using digital currencies to pay for goods and services, but normal rules will only be applicable when used as payment for sales of goods and services.
ATO has warned against the risk of financial scams which involve cryptocurrencies, after more than $800,000 was lost by Australians in a series of crimes in November’18 alone.
With ATO referring Cryptocurrencies as property, help Australia in curbing financial scams? Share your thoughts in the comment.