Australian Tax Office is targeting cryptocurrency profits
Each year, the Australian Tax Office warns tax payers that they will be targeting specific areas. This year, cryptocurrency traders will be in the spotlight.
The Australian Tax Office (ATO) has sent out a warning to people that have been making profits on cryptocurrency trades. In particular, the ATO will be using new anti-money laundering legislation to crack down on tax-cheating bitcoin traders.
The director of tax communications at H&R Block, Mark Chapman told reporters that cryptocurrencies are "an area where you should get professional advice because the ATO’s guidelines are very complex".
Unlike cash, the ATO sees the trade and use of cryptocurrencies as a barter arrangement, rather than a transaction completed using fiat currencies or the established banking system.
As well as focusing on ensuring the ATO collects its pound of flesh, the ATO will carry out data-matching to investigate cryptocurrency traders by using the established 100-point identification system.
With concerns over how criminals might be using cryptocurrencies to launder money, as well as concerns over tax evasion, it's not surprising the government is becoming increasingly focused on the flow of wealth through these unregulated, opaque markets.
So, while newsagents and Brisbane Airport are happy to get on the bitcoin bandwagon, the government is playing catch-up.
Last year, the ATO issued some advice regarding the tax treatment of cryptocurrencies in Australia. Unfortunately, that advice is quite tricky to decipher as there are interactions with rules around GST (the sale and purchase of cryptocurrencies is not subject to GST) and with the way the ATO views trades of cryptocurrency as the exchange of goods as barter. That means it's subject to capital gains tax.
In other words, if you're planning on, or already are, engaging in cryptocurrency trading, you should get professional advice.
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