Australian Crypto Investors Must Report Profits or Face Penalties

Australian crypto investors must report their profits to the Australian Tax Office (ATO) or risk penalties and tax audits. Crypto is classed by the ATO as an asset, not a currency. The ATO is concerned that many taxpayers believe their cryptocurrency gains are tax free or only taxable when the holdings are cashed back into Australian dollars, the bureau explained in a media release. Assistant Commissioner Tim Loh explained that gains from cryptocurrency are similar to gains from other investments, such as shares. Generally, as an investor, if you buy, sell, swap for fiat currency, or exchange one cryptocurrency for another, it will be subject to capital gains tax (CGT) and must be reported. Thus, movements within a digital wallet also count, so it’s wrong to think tax is only payable once all of your crypto holdings have been sold. Holding a cryptocurrency for at least 12 months as an investment may entitle to a CGT discount.

“We are alarmed that some taxpayers think that the anonymity of cryptocurrencies provides a licence to ignore their tax obligations.[…] While it appears that cryptocurrency operates in an anonymous digital world, we closely track where it interacts with the real world through data from banks, financial institutions, and cryptocurrency online exchanges to follow the money back to the taxpayer.”

The ATO matches data from cryptocurrency designated service providers to individuals’ tax returns.

This is just the latest warning from government officials that they will get tougher on enforcement of crypto regulation and hints that tighter regulation is coming.

While Hong Kong does not impose tax on capital gains, the regulators instead are implementing a tighter regulatory regime under Anti-money laundering rules to restrict crypto exchanges and limit service offerings to professional investors only.

Zetland Tax