The Australian Taxation Office (ATO) is set to issue warnings to hundreds of thousands of residents who may have traded cryptocurrencies.
As reported by news.com.au on Wednesday, up to 350,000 Australians will be contacted by the ATO in the coming weeks reminding them of their obligations when trading in digital assets like bitcoin (BTC).
Under Australian federal law, cryptocurrencies are considered as a form of property and are thereby subject to the same regulations relating to capital gains tax.
The ATO will ask those that traded cryptocurrencies throughout the 2017–2018 financial year to review their tax forms and declare instances in which they bought, sold or traded digital assets to make it easier come tax time.
As proof of trades, records kept by individuals should include exchange records, digital keys, and records of agents, as well as any legal or accounting costs associated with their trading activity. Further, the agency is asking individuals to keep a record of the Australian dollar exchange rate at the time of their transactions, as this might significantly impact earnings.
The tax office is utilizing its Data Matching Protocol for cryptocurrencies, which allows it to cross-check data it has on individuals with data provided by exchanges (dubbed crypto designated service providers) in an attempt to identify those who may have misreported on previous tax returns.
“Under this program we obtain cryptocurrency transaction data from currency exchanges on taxpayers who have bought and sold cryptocurrency,” an ATO spokesman said in the report.
The planned warnings come as other tax agencies around the world move to more closely monitor for tax evasion involving cryptocurrencies. The U.S. Internal Revenue Service last summer issued similar warning letters about misreporting income from trades, and released its first guidance on crypto tax for five years in October.
Ukraine also said in recent weeks that taxpayers will need to include crypto earnings in their returns, listing them under intangible property.
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