The Australian Taxation Office (ATO) has announced that it will be increasing its focus on tax obligations associated with virtual currencies, expressing concerns that many investors do not understand the taxation implications of crypto-asset ownership.

The Australian Taxation Office (ATO) has announced that it will be increasing its focus on tax obligations associated with virtual currencies, expressing concerns that many investors do not understand the taxation implications of crypto-asset ownership.

In a statement released in June, the ATO announced that it will be writing to 100,000 taxpayers who have crypto-asset investments to encourage them to review their previous tax returns. It will also be prompting around 300,000 taxpayers to report their crypto-asset capital gains or losses in their 2021 tax returns. Capital gains tax also applies to non-fungible tokens, the ATO reminds taxpayers.

Digital padlock

The ATO’s Assistant Commissioner for Individuals and Intermediaries, Tim Loh, said: ‘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.’

Taxpayers who fail to report their crypto-assets or do not take action to do so when reminded will be subject to penalties and a possible audit. However, in a recognition of the complexities of cryptocurrency investments, the ATO says it is focused on ‘helping people get it right.’ Consequently, taxpayers who have realised they have made a mistake and make a correction in their tax return are likely to see significantly reduced penalties.

The ATO has also created a fact sheet to help taxpayers better understand their compliance obligations around digital currencies.

Source: step.org

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