Australian Tax Office is targeting cryptocurrency profits

Posted: 8 March 2018 9:00 am
News

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.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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