Aussie taxman makes it clear – report digital currency or be audited

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Australia has always been more receptive to the use of digital currency and has supported its growth in a number of ways. While the country’s progress has helped the ecosystem become more stable and friendly, authorities in the country are making it clear that Aussies will be held accountable if they don’t play by the rules. This includes adhering to tax legislation, and 350,000 citizens are about to find out what happens when they don’t.

The Australian Taxation Office (ATO) has drafted a letter to individuals it has identified as having been involved in digital currency transactions in the past couple of years and is preparing to mail out that letter, or send it via email, to everyone on its list. The communication is designed to be a reminder of the tax obligations related to digital currency transactions, and targets those individuals who haven’t reported such transactions on their tax filings.

In speaking with news.com.au, an ATO representative explained, “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. You can read more about your obligations in respect to cryptocurrency on our website or if you use a tax agent, you can discuss your obligations with them.”

The ATO is asking taxpayers to take a look at their tax filings for the 2017-18 financial year and determine if they properly reported their capital gains based on the inclusion of digital currency. Since digital currency is classified as a form of property, if someone had sold any holdings during that time, it would have had to be included as gains. 

If the taxpayer realizes that he or she inadvertently overlooked the digital currency inclusion and submits a corrected filing, there won’t be any penalties. However, if, instead, he or she ignores the warning, an audit could be on its way The spokesperson added, “For other taxpayers where we can see they hold cryptocurrency, but may not have sold or traded any during the (financial) year, we will be writing to them to remind them of their tax obligations and the records they should be keep. Over the next two months, we expect to contact as many as 350,000 individuals who have traded in cryptocurrency in the last few years.

The ATO made it clear last May that it would start cracking down on digital currency reporting requirements.  Individuals have had plenty of time to prepare for the inevitable, and this is just another step that will help Bitcoin mature even more.