Australian Taxation Office to crack down on cryptocurrency traders this fiscal year

How the taxman is about to crack down on CRYPTO this exercise

  • The Australian Taxation Office will crack down on cryptocurrency trading this year
  • An estimated 500,000 to one million Australians trade cryptocurrency online
  • Data from trading sites will be used to ensure crypto holders are paying what they owe
  • The ATO will also carefully monitor Covid work from home expense claims

Up to one million Australians will be forced to pay more tax this year as the Australian Taxation Office moves to crack down on cryptocurrency trading.

Digital currency holders have been urged to prepare for the upcoming tax season in July as the ATO will take extra precautions to ensure all cryptocurrency exchanges have been claimed.

The ATO issued a warning last year that money from cryptocurrency trading is taxed as business income and must be reported.

The ATO will use data collected from trading sites to trace profits from the 500,000 to one million Aussies using crypto this fiscal year

H&R Block’s director of tax communications, Mark Chapman, told Seven News that the ATO will use data collected from trading sites to trace the profits of the 500,000 to one million Australians using crypto.

“A growing number of taxpayers are jumping on the bandwagon and the ATO believes some of them are not reporting the profits – and in some cases the losses – they make on their investments,” he said. .

“To aid in their research, the ATO is collecting records en masse from designated Australian cryptocurrency service providers as part of a data matching program to ensure that people who trade in cryptocurrency are paying the correct amount of tax.”

Crypto Tax Calculator can be used to help crypto traders calculate how much tax they owe.

The ATO recently claimed an $8.7 billion tax shortfall from taxpayers and should closely monitor the tax deductions claimed this year

The ATO recently claimed an $8.7 billion tax shortfall from taxpayers and should closely monitor the tax deductions claimed this year

However, Mr. Chapman indicated that cryptocurrency would not be the ATO’s only focus this fiscal year.

The ATO recently claimed an $8.7 billion shortfall to taxpayers and should closely monitor the tax deductions claimed this year, particularly in relation to working from home.

“The focus on home office, cellphone and home internet costs is likely to be particularly pronounced with so many people working from home due to Covid,” Mr Chapman said.

He recommends that taxpayers check that they have the necessary supporting documents for expense reports – invoices, receipts, diaries, etc. – before submitting a tax deduction.

WHAT ARE CRYPTOCURRENCIES?

A cryptocurrency is a digital currency that can be used for online transactions.

It’s the Internet’s version of money – unique pieces of digital property that can be transferred from person to person.

All cryptocurrencies use the “blockchain” and only one can be created and shared using specific agreed rules. For each cryptocurrency, the rules are slightly different.

Bitcoins are lines of computer code that are digitally signed each time they travel from owner to owner.  Physical part used as illustration

Bitcoins are lines of computer code that are digitally signed each time they travel from owner to owner. Physical part used as illustration

People can buy bitcoins through exchanges such as Coinbase and Bitfinex.

Bitcoin was the first cryptocurrency, created in 2009.

Other currencies such as Litecoin and Dogecoin do the same thing but have slightly different inflation levels and rules surrounding transactions.

Currently, around 270,000 transactions take place every 24 hours.

These currencies do not exist as physical or digital objects. It is simply a collective agreement with other people on the network that your currency has been legitimately “mined”.

Blockchain is the record of changes in ownership of a currency that is broadcast through the network and managed by computers around the world.

The network works by harnessing the greed of individuals for the collective good.

A network of tech-savvy users called miners keep the system honest by pouring their computing power into a blockchain, a global tally of every bitcoin transaction.

As long as miners keep the blockchain secure, counterfeiting shouldn’t be a problem.

However, because cryptocurrencies allow people to exchange money without a third party getting involved, they have become popular with libertarians as well as techies, speculators, and criminals.

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