ATO crypto warning: We’re on to you

The Australian Taxation Office (ATO) has issued a blunt warning: they’re keeping a close eye on crypto investors.

As reported in News.com.au, the ATO has been escalating its rhetoric on crypto investors in recent years. Now it’s going to be actively looking for unreported or under-reported cryptocurrency gains and losses from this year’s taxation filings, which begin on July 1.

The common perception is that as an anonymous and decentralised asset class, crypto investors are able to “dodge” their nation’s taxation system. The ATO has made it explicitly clear that they believe that a significant number of crypto and NFT asset holders are failing to declare profits from their investments.

How the ATO will catch you

While it is true that the ATO cannot directly trace crypto assets, there is a point where the digital and real worlds meet, and by examining data from banks and other financial institutions, ATO investigators can trace investments into crypto platforms back to their source.

“To help them in their search, the ATO is collecting bulk records from Australian cryptocurrency designated service providers as part of a data-matching program to ensure people trading in cryptocurrency are paying the right amount of tax,” ATO Assistant Commissioner, Tim Loh, said in the News.com.au story.

“Remember, investing in cryptocurrencies can give rise to capital gains tax on profits. Traders can be taxed on their profits as business income.”

To give a sense of the scale of the ATO investigations, of the 850,000 Australians that currently own cryptocurrency, in the last financial year the ATO wrote directly to 100,000 and prompted another 300,000 more to properly report relevant gains and losses from digital currencies.

No data was provided on the number of crypto asset holders that were actively audited, however.