The ATO are sending out letters to 350,000 people demanding they pay their crypto taxes. Here’s how to keep on the straight and narrow.
Take a look at the BitcoinAUS Reddit page right now and you’ll see one topic dominating the conversation: people panicking after the Australian Tax Office (ATO) sent them letters telling them to ‘fess up and pay up on their old crypto transactions.
For many it seems like a wake-up call to finally sort out their taxes from the 2017 bull-run, while others are being pinged for selling $50 worth of BTC four years ago. But the take-away message is simple: if you’re an Australian citizen and you have ever – and we mean ever – dealt with cryptocurrencies, then the ATO probably knows about it.
Now, here’s an artist’s impression of the tax office coming for your crypto gains:
When it comes to the tax office, the best piece of advice we can give you is: disclose, disclose, disclose. The ATO works with dedicated crypto tracking specialists to deanonymise crypto transactions and given that they’ve discovered 350,000 Australians in potential breach of their tax reporting obligations we can assume the work is going rather well.
I mean, who would have thought that a technology which records every transaction on an immutable and publicly available ledger would make it so easy for the tax department to track…
But we understand that disclosure in crypto can be a complex and challenging beast. It doesn’t take much to find yourself trading across multiple exchanges, multiple coins and multiple currencies in a way that simply doesn’t have a parallel in any other market. So, how do you even get started?
Help is on its way
As Australia’s longest running crypto exchange, CoinJar have been monitoring developments in the land of cryptocurrency and tax for almost eight years. For this tax season, we’ve decided to finally bite the bullet and compile a comprehensive, easy-to-read guide to everything we currently know about crypto tax in Australia.
For instance: what does it even mean to trade 5000 XRP for 2.8 ETH one exchange and 230 USDC on another? At what point do you stop being an investor and start acting as a professional trader? And how much money can you actually save just by HODLing your coins for longer than 12 months?
CoinJar have also partnered with crypto accounting software CoinTracker, CryptoTaxCalculator and Koinly to make it easy not only to track all your crypto transactions – whether they’re buys, sells, trades, gifts, donations or that half a bitcoin you lost on some shady exchange in 2015 – but to then render all of those transactions in an ATO-friendly AUD capital gains and losses worksheet.
If you are interested in signing up, you can check out special offers for CoinJar users here.
(As someone who has used CoinTracker for the last couple of years, I can say that this is a sure-fire way to impress your accountant/save you a significant amount in accounting fees.)
Doing your crypto tax can seem overwhelming at first, but it only takes a few small steps to start straightening things out – and the earlier you start the easier it will be in the long run, from both an administrative and tax point of view.
After all, just like Santa Claus, the ATO can tell if you’ve been naughty or nice. But, unlike Santa, they have the legislative and financial resources to really make you pay.