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The Australian Taxation Office (ATO) is once again on the lookout for cryptocurrency tax dodgers.
As reported by news.com.au on Friday, the ATO’s assistant commissioner Tim Loh said his office was “alarmed” certain taxpayers thought the anonymity of cryptocurrencies meant they could ignore tax obligations.
The ATO, the governmental agency that oversees the country’s federal tax collection, will inform around 100,000 taxpayers holding cryptocurrency to review their previously lodged returns and ensure their declarations are correct. The tax department will also be asking around 300,000 people lodging their 2021 tax return to report their cryptocurrency capital gains or losses, according to the report.
“While it appears cryptocurrency operates in an anonymous digital world, we closely track where it interacts with the real world through data from banks, financial institutions and cryptocurrency online exchanges to follow the money back to the taxpayer,” Loh said.
Under Australian federal law, cryptocurrencies are taxed as a form of property and are subject to the same regulations relating to capital gains. Non-fungible tokens, which have risen in popularity this year, are also considered taxable events under capital gains when disposed of.
“(We) follow the money trail back to the taxpayer and we do that through the ATO which has data matching profiles with cryptocurrency exchanges,” Loh said. “They provide that information to us and we use that information to cross match with people’s tax returns.”
Notifications from the ATO to potential culprits looking to obfuscate or shirk their duty to pay taxes on crypto is a familiar battleground for the department.
Last year, the ATO issued a similar warning to hundreds of thousands of residents, claiming it has the ability to deploy its Data Matching Protocol for cryptocurrencies. This allows the taxman to cross-check data on individuals with data provided by cryptocurrency exchanges.
“There isn’t a game of hide and seek,” said Loh. “We have got that information and all we are asking people to do is follow the rules.”
