Have you bought or sold cryptocurrency such as Bitcoin during the year? If so, the tax office could be taking a close interest.
The ATO estimates there are between 500,000 to 1 million Australians who have invested in cryptocurrency assets and many of them have failed, or will fail, to properly report the profits they have made for tax purposes.
As a result, the ATO is collecting bulk records from Australian cryptocurrency designated service providers (DSPs) as part of a data-matching program to ensure people trading in cryptocurrency pay the right amount of tax.
Data will include purchase and sale information.
Following the exercise people may be contacted by the ATO and given the opportunity to verify the information collected, before any compliance action is undertaken.
People will be given at least 28 days to clarify any information that has been obtained from the data provider.
Remember, if you invest in cryptocurrency and then sell it, you will be liable to capital gains tax on any profits.
If you become a trader you could be regarded as running a business, meaning any income from your business will be assessable (in other words, not subject to the CGT rules, meaning you won’t
benefit from the 50% discount available to many investors).