The Australian Tax Office (ATO) is gearing up to send out close to 350,000 notices to cryptocurrency investors in effort to “remind them” of their tax obligations. This is by far the largest crypto compliance effort conducted by a government to date.
If you are an Aussie who has been trading cryptocurrencies over the past years, there is a good chance you will receive one of the below notices.
An ATO spokesperson made the following comments regarding the warning notices:
“In April last year we published our Data Matching Protocol for cryptocurrency. Under this program we obtain cryptocurrency transaction data from currency exchanges on taxpayers who have bought and sold cryptocurrency.
Using this data we’ve found that due to the complex nature of cryptocurrencies, some people may not be aware that there may be tax obligations, so our campaign is designed to help raise awareness and give people the opportunity to fix any mistakes.”
As the warning notice mentions, the ATO treats cryptocurrencies such as Bitcoin like an investment for tax purposes. This means that capital gains and losses rules apply when you sell, trade, or otherwise dispose of your crypto. These gains and losses need to be reported with your taxes.
For a complete breakdown discussing how the ATO requires you to be reporting your cryptocurrency gains and losses on your taxes, see this guide: The Complete 2020 Australian Crypto Tax Guide.
If you have properly been reporting your cryptocurrency trades and transactions on your taxes over the years, you have nothing to worry about. If you haven’t, it is wise to go back and calculate your cryptocurrency gains and losses and file an amendment to your prior years tax returns to avoid an ATO audit.
You can obtain your historical records from your cryptocurrency exchanges to do your gains and losses calculations by hand, or you can use cryptocurrency tax software to automate the entire process.
These help guides walk through the process of retrieving your transaction history from the cryptocurrency exchanges you used such as Coinbase, Coin Jar, CoinSpot, BTC Markets, or others. Use these transaction history documents to report your dispositions.
Cryptocurrency tax software like CryptoTrader.Tax is built to automate the entire crypto tax reporting process. Today, thousands of Aussies leverage the “do-it-yourself” software to properly report crypto on their taxes.
See more verified reviews from CryptoTrader.Tax users here.
Simply create an account with CryptoTrader.Tax completely for free (make sure Australia is selected as your home country in your settings).
Next, select the exchanges that you’ve used over the years, and import your transaction history with the click of a button from these exchanges (no manual work needed).
Once all of your data is imported, simply run your tax reports for all of the years you need. You can get a free preview of your reports to make sure everything is accurate before ever having to pay.
You can generate your tax reports for all years that you’ve been trading cryptocurrencies within the platform. This is helpful if you need to amend prior years taxes.
Take these reports to your accountant, or use them to file your taxes yourself.
Have any questions? Our live-chat customer support team is happy to answer your cryptocurrency tax questions free of charge. Chat with us today!