During March 2020, ATO, who is held as the responsible entity for administering all the tax-related transactions in Australia, just like the IRS operating in the United States. The ATO was found active in starting the crackdown process to cover all the tax liabilities. With the news update and other notifications, it was heard that ATO is set to send tax warning letters at the homes of about 350,000 Aussie people engaged in cryptocurrency usage.
ATO (Australian Tax Office) is coming up with a notification regarding 350,000 notices which intend to notify the investors involved in the crypto market as a reminder to submit the due tax amounts. As a tax obligation, it is set to make the crypt investors recall their duty to fulfill the tax amount paid to ensure further presence in the crypto market. Seeing from the past, nothing such big has ever been coming into action. It is one of the biggest acts implemented by the ATO so far under the crypto investment compliance norms. If you’re also standing in one such position, then soon, the letter will be outside your doorstep.
All the Australian investors involved in crypto trading from the last few years need to abide the lawful conduct. When falling into a part of tax obligation, one needs to fulfill it or else face the adverse results.
Warnings set to be released for crypto investors:
One of the spokesperson from ATO came up with certain comments over the set of notices released for crypto investors as a warning- “In the last year’s April month, ATO came up with a publishing stage of Cryptocurrency Data Matching Protocol. Using this program, all the information regarding the transactions involving cryptocurrency, including exchange on the investors liable for the tax that made an investment or sold up cryptocurrency. With all this data, it is found that many of the cryptocurrency users are unaware of the legal obligations to pay taxes. This is why the campaign came into existence to create such taxpayers avail about the legal obligations to pay taxes and spread awareness among taxpayers to rectify past mistakes.”
Australia’s cryptocurrency tax fundamentals:
In the tax warning letters, it is mentioned that the ATO considers cryptocurrencies to be similar to Bitcoin, which is under the category of investments used to get settled in terms of taxes. As of now, it can be said that all the capital loses or gains applicable rules do hold a validity when someone makes a transaction whether sale or purchase using crypto. Seeing such a thing, it becomes crucial to consider reporting all such gains or losses as a part of your tax liability.
In all these letters, it is framed with the sole purpose of aware of the crypto users about the taxpaying report requirement. The ones who get the notice hold a chance to cover up the mistake and make payment for the taxes applicable on crypto usage in the past years. To know how do these letters look like, one can refer to IRS Letter 6174 & 6174-A letters. These letters are the ones that were sent to about 10,000 taxpayers in the United States.
What actions can be taken to get out of it! If you’re already making the entire cryptocurrency trade reporting and duly participating in tax payments from the past years, then you need not think about it. On the contrary, it is important for the ones who didn’t make the applicable tax payments to rectify the mistakes. You need to go back and make all your record for the gains or losses in the past years and take a step ahead to file the respective amendment regarding the past year’s returns. This can help you get saved from the ATO’s eye.