During the financial years 2014–15 to 2018–19, around 1 million taxpayers have enjoyed buying, selling or transferring cryptocurrency and will now be subjected to further scrutiny. Starting this year, the ATO will begin collecting data from cryptocurrency-designated service providers to determine whether taxpayers are meeting their tax and superannuation obligations (including registration, lodgement, reporting and payment responsibilities).
Why is tax legislation surrounding cryptocurrency tightening?
This move has come after years of speculation and concerns about non-compliance such as cryptocurrency-related tax evasion and money laundering. The realm of cryptocurrency and crypto transactions is complex and everchanging. Taxation laws in this area are still evolving to regulate this relatively new and innovative transactional system.
The ATO believes that by collecting data from cryptocurrency service providers they can ensure that taxpayers are paying the right amount of tax. They are giving taxpayers 28 days to clarify any information obtained from service providers before they take official compliance action. If taxpayers realise, they have made an error or omission in their tax return they should contact the ATO to avoid or reduce penalties.
Cryptocurrency and tax time
The boom in cryptocurrency in the last decade has been staggering, with between 500,000 and 1 million taxpayers engaging in crypto transactions between 2014 and 2019. As such, it is important that tax consultants and accountants are asking their clients questions about cryptocurrency transactions as part of their tax-time checklist.
At B&M Financial we stay abreast of legislative changes that affect business practices and tax laws to ensure that our clients don’t pay more tax than they need to. We can help you keep track of your transactions and investments to ensure you are meeting your financial goals and objectives. To learn more about the tax legislation surrounding crypto transactions, contact our Gold Coast office today.