ATO sheds light on crypto compliance focus
The Tax Office has urged advisers and taxpayers alike to heed its guidance on accounting for cryptocurrency come tax time, when it will be looking to ensure that all capital gains events are accurately reported — not just gains.
Speaking at a tax-time tips seminar on Thursday, ATO assistant commissioner Adam O’Grady warned tax agents and taxpayers that his office will be closely watching all capital events related to cryptocurrency come tax time.
“It is really important for all capital assets; we will be looking to ensure that the people have reported the capital gains events — and this is for both gains and losses,” Mr O’Grady said.
Mr O’Grady urged tax agents to make use of data pre-filled by the ATO. He said that in addition to using pre-filled data to assist agents submit accurate returns, it will also be using data supplied by Australian cryptocurrency exchanges to cross-reference returns.
“We get information and data on property sales from all the state and territory revenue offices,” he said. “We have very good shares data as well and it’s available as a pre-filled service [where] you can download different shares transactions for your clients.
“We are also getting cryptocurrency information from Australian scientists as well. So we’ll be using that information to look at returns as they come in.
“And when people have had significant capital gains events according to that data, if it’s not reported in the return, we’ll be looking to hold those returns and again enquire with you and with your clients as to where those transactions are.”
Mr O’Grady stressed the importance of reporting all capital gains events — whether they be losses or earnings — to avoid unwanted attention from the Tax Office.
“One of the emerging themes we are seeing in the capital gains space is losses not being reported through the tax return. It’s really important to still report those losses through the return,” he said.
“Not only does it avoid us having to follow up as to why you haven’t done that for the year, and while it may not be a financial impact to you, or the clients this year, because those losses are quarantined. It applies for future years.”
Mr O’Grady’s warnings follow the beginnings of an ATO crypto compliance crackdown last year, as the pandemic prompted a marked increase in consumer investment.
The Tax Office has since allocated substantial resources into cryptocurrency data matching and the promotion of taxpayer obligations for those buying, selling and holding crypto assets.
The ATO last year said that it would work with designated service providers, or DSPs, to obtain data used to identify buyers and sellers of crypto assets and quantify related transactions.
The Tax Office then uses data provided by DSPs and cross-references them against ATO records to identify individuals who may not be meeting their registration, lodgement or payment obligations.
Last year, the ATO took a good-faith approach to those who had failed to meet their crypto asset tax obligations, but it isn’t expected to last much longer, according to H&R Block director of tax communications Mark Chapman.
Mr Chapman in February said that now is time for those involved in cryptocurrencies to pay attention to the “tax side of things”, before the ATO ramps up enforcement of undeclared crypto assets.
“I think the first thing to say is that the ATO has, within the last year or so, started gathering data from cryptocurrency exchanges, the actual providers,” he said. “As a result of that, I think the ATO now has a much better understanding of who’s involved in this market.”
While the ATO has been expected to ramp up auditing around cryptocurrencies for the past three years, and hasn’t, its “light touch” isn’t expected to last much longer.
The ATO first showed signs of cracking down on compliance in March last year, when an undisclosed number of letters were sent to taxpayers, warning them to come clean with their capital gains or losses.
“Quite a few clients and non-clients have received these letters from the ATO, flagging that there’s a mismatch in their data,” Mr Chapman said. “And I think that’s prompting a lot of people to come in to see their tax agent, or maybe to see a tax agent for the first time if they’ve been doing it themselves.
“But I’m not convinced that [the ATO’s light-touch approach] will necessarily last forever.
“I think, as the data comes in, as the ATO has a greater awareness of how many people are in this space, they will start to take a slightly firmer line.”
John Buckley
24 May 2021
accountantsdaily.com.au
Hot Issues
- FBT Reminder – Odometer Reading
- ATO’s debts on hold campaign prompts new IGTO guidance
- A comprehensive collection of small business benchmarks
- The 2025 Financial Year tax & super changes you need to know!
- Underperforming employees: When can you terminate?
- A comprehensive list of guides to industry specific tax deductions.
- ‘Renewed concerns’ about economy sees consumer sentiment dip: Westpac
- Oldest Buildings in the World.
- Small businesses may ‘collapse under strain of payday super’, IPA warns
- ATO’s hands tied with scrapping on-hold debts, expert says
- What Drives Your Business Growth and Profits?
- Australian Taxation Office (ATO) shifting to firmer debt collection activity
- Why employee v contractor comes down to fine print
- Sharing economy reporting regime for platform operators
- Countries producing the most solar power by gigawatt hours
- Illegal access nets $637 million
- Accessing superannuation benefits.
- Does your business have a company Power of Attorney?
- Labor tweaks stage 3 tax cuts to make room for ‘middle Australia’
- GrantConnect
- 2 in 3 SMEs benefit from instant asset write-off, survey reveals
- Updated guidance on R&D claims
- Do you know how to recover debts?
- Wheat Production by Country
- Types of small business benchmarks
- Vimeo test
Article archive
- January - March 2024
- October - December 2023
- July - September 2023
- April - June 2023
- January - March 2023
- October - December 2022
- July - September 2022
- April - June 2022
- January - March 2022
- October - December 2021
- July - September 2021
- April - June 2021
- January - March 2021
- October - December 2020
- July - September 2020
- April - June 2020
- January - March 2020
- October - December 2019
- July - September 2019
- April - June 2019
- January - March 2019
- October - December 2018
- July - September 2018
- April - June 2018
- January - March 2018
- October - December 2017
- July - September 2017
- April - June 2017
- January - March 2017
- October - December 2016
- July - September 2016
- April - June 2016
- January - March 2016
- October - December 2015
- July - September 2015
- April - June 2015
- January - March 2015
- October - December 2014
April - June 2021 archive
- 10% Super Guarantee from 1st July 2021
- End of year financial strategies
- Closely held payees: STP options for small employers
- Videos to help understand accounting topics.
- ATO Small Business Newsroom - May / June
- New insolvency rules commence
- ATO sheds light on crypto compliance focus
- Post Federal budget reflections
- Federal Budget 2021 - Overview
- Building a more secure and resilient Australia
- Federal Budget 2021 - Health
- ATO signals crackdown on 4 ineligible work-from-home claims
- Taxpayers urged to keep work-from-home records
- Businesses feeling ‘adverse’ impacts of COVID-safe measures: ABS
- New insolvency rules commence
- ATO promises not to ‘destroy’ businesses as it resumes debt collection
- 5 strategies for successful ‘work from home’ policies
- Small businesses: don’t forget your FBT concessions
- ATO chases $172bn in undeclared contractor income
- ‘Penalties will resume’: ATO flips the switch on debt recovery
- JobMaker Hiring Credit rules and reporting
- ATO data-matching: JobMaker
- A broad range of Calculators.
- ATO Small Business Newsroom
What our clients say about us