In March 2020, The Australian Taxation Office (ATO), the entity responsible for tax administration in Australia similar to the IRS in the US, was in the process of initiating the largest crypto tax crackdown. As news.com.au reported, the ATO was planning to send out crypto tax warning letters to 350,000 Australians.

We are now seeing taxpayers getting these tax warning letters:. 

These letters are intended to educate the taxpayers about cryptocurrency related tax reporting. Those who receive the letters will have an opportunity to amend the return and pay the applicable taxes. These letters look similar to the IRS letter 6174 & 6174-A letters received by nearly 10,000 US taxpayers.

Interestingly, the ATO letters seem to be targeting a large number of crypto users irrespective of the size of their crypto holdings. Generally, tax authorities like the IRS are more inclined to focus on cases with high dollar amounts to justify the cost of administration. 

Tax treatment for cryptocurrencies under Australian tax code is similar to the US tax code for the most part. Under the Australian tax code, crypto currencies are treated as a “form of asset” and subject to capital gains taxes. Therefore, selling, trading or exchanging cryptocurrency and converting it into Australian dollars or a foreign currency or using it to obtain goods or services can trigger taxable events. Record keeping is also essential similar to the US tax system. Recipients of ATO crypto tax notices should seek out a reliable cryptocurrency tax software to complete their tax filing (or amend previous returns).


Disclaimer: this post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.

(Excerpt) Read more Here | 2020-06-30 20:25:47
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