The Australian Tax Office is advising would-be cryptocurrency and NFT billionaires that they must pay tax on any profits they make from the rising digital revolution.
The Australian Taxation Office (ATO) warned taxpayers today that capital gains tax (CGT) applies to cryptocurrencies, as well as the sale of non-fungible tokens (NFTs).
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Crypto earnings are only taxed when they are cashed back into Australian dollars, according to the tax agency.
"We're concerned that some taxpayers believe the anonymity of cryptocurrency gives them permission to flout their tax duties," said ATO Assistant Commissioner Tim Loh.
"While cryptocurrency appears to function in an anonymous digital realm, we use data from banks, financial institutions, and cryptocurrency online exchanges to trace where it interacts with the real world in order to track the money back to the taxpayer."\
The ATO compares information from bitcoin approved service providers to tax filings to ensure that investors pay the correct amount of tax.
"We all know how difficult cryptocurrency can be. That's why we're so focused on assisting individuals in getting it properly "Mr. Loh explained.
"The greatest recommendation for nailing your cryptocurrency profits and losses is to maintain exact records of all transactions, including dates, the value in Australian dollars at the time of the transactions, what the transactions were for, and who the other party was, even if it was only their wallet address."
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Last year, the ATO contacted around 100,000 taxpayers who had transacted in cryptocurrencies directly, as well as prompting 140,000 taxpayers at the time of lodgement.
"We'll be writing to about 100,000 taxpayers with bitcoin holdings this year to clarify their tax duties and encourage them to check their previously filed returns," Mr Loh said.
"We also intend to urge almost 300,000 taxpayers to submit their bitcoin capital gains or losses when they file their 2021 tax return."
Despite the dire warnings, Mr Loh stated that if a taxpayer realizes they have submitted a return with a mistake, they would not be penalized harshly if it needs to be remedied.
"We will greatly lessen fines if you realize you've made a mistake and fix your return," Mr Loh added.
"However, neglecting to register crypto-assets and neglecting to respond when notified will result in penalties and maybe an audit."
Australians who have invested in bitcoin or sold NFTs can consult the ATO's fact sheet to determine their tax liabilities.
Source : 9 News
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