ATO has identified that many Aussies are buying, selling, or exchanging digital coins; with this knowledge, ATO is expecting to see more capital gains or capital losses reported in tax returns this year. It is one of the areas where they will focus on this 2022FY.
Now, if you wonder – can the ATO track Crypto transaction? The answer is yes; the ATO can track Crypto transactions; if you have an account with any Australian cryptocurrency designated service provider, then it’s likely that the ATO already has your data; these are the few ways by which ATO can track your coin transactions.
- Through data collection processes with Australian exchanges.
- Through “Know, Your Customer (KYC),” information provided to the Australian exchange or wallet.
In 2020 and 2021, hundreds of thousands of Australian crypto investors received a notification saying that they have transacted Crypto and that the client will need to report it in their tax return. It is also likely ATO will issue a similar notification in 2022FY.
The ATO said if a person disposed of a Crypto asset this financial year, they would need to calculate the capital gain or the capital loss and will need to report it in their tax return.
The tax treatment of your client’s Crypto will depend on whether your client is seen as an individual investor or a trader making a regular income.
If your client is an investor, then they will fall under capital gain, and if a client is a trader, it will come under the “business activities,” i.e., earning income from buying and selling Crypto.
Investors can access the 50% Capital Gains Tax discount for long-term gains, whereas traders cannot.
