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1 million to get message from ATO: ‘We can match the data’

·Personal Finance Editor
·3-min read
A crowd of people crossing the street in the Sydney CBD and someone filling out an ATO deductions form.
The ATO has urged crypto investors to be honest when lodging their tax return. (Source: Getty)

The Australian Taxation Office (ATO) wants taxpayers with crypto assets to make sure they know their obligations so they can get it right the first time.

ATO assistant commissioner Tim Loh said he understood tax obligations for crypto assets could seem complicated.

“Our focus is on helping people get it right,” Loh said.

“Over 1 million taxpayers will have a message appear as a reminder when they prepare their tax returns, saying they may have capital gains or capital losses from crypto to declare.”

Generally, crypto is considered an asset for capital gains tax (CGT) purposes and investors have been told they must report when they no longer own the asset because they have:

  • Traded, sold or gifted the crypto

  • Exchanged one crypto asset for another

  • Converted crypto to a fiat currency, for example to Australian dollars (AUD)

  • Used crypto to obtain goods or services

When the disposal of a crypto asset occurs, investors may have a capital loss or a capital gain, which needs to be included in their tax returns.

All records for crypto transactions need to be kept to work this out, the ATO said.

If an investor holds onto a crypto asset for 12 months or more, they may be eligible for a 50 per cent CGT discount.

If you’ve lost money on crypto

A capital loss can only be made when an asset is disposed of and must be reported in the year they occur.

Paper losses can’t be claimed when an asset just decreases in value.

Capital losses can’t be offset against other income like salary or wages but can be used to offset against capital gains from the current financial year or be carried forward to offset capital gains in future financial years.

Find out how to work out and report CGT on crypto.

If you’ve made money from crypto

If income is received from crypto, such as airdrops or staking rewards, it also needs to be included in tax returns as “Other income”.

“Whether you receive income in the form of Australian dollars or crypto assets, you need to make sure the correct information is included in your tax return,” Loh said.

Data matching

The ATO can track money trails back to taxpayers through data from banks, financial institutions and crypto asset online exchanges.

“We are able to match this data to individuals transacting in crypto assets, so don’t forget to include gains and losses in your tax return,” Loh said.

The ATO uses this data to help educate investors on the tax obligations and remind them to include crypto transactions on their tax return.

The ATO said those who corrected their return wouldn’t receive any penalties; however, anyone choosing not to act may receive further scrutiny and an audit of their affairs, either before or after their notice of assessment is issued.

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