The tax office is “strongly encouraging” taxpayers to review cryptocurrency guidance, ahead of its surveillance and compliance activity for tax time 2018.
‘We will take strong action’: ATO outlines cryptocurrency plans for tax time
The tax treatment of cryptocurrencies, bitcoin in particular, is an ongoing source of confusion for advised and non-advised taxpayers.
However, this is unlikely to be a suitable defence for non-compliance at tax time 2018, particularly where taxpayers have not tried to engage with the ATO to understand and meet their obligations.
“Where people attempt to deliberately avoid these obligations we will take strong action, in particular using a range of existing powers that are designed to address unexplained wealth and conspicuous consumption that may arise through profits derived from cryptocurrency investment,” an ATO spokesperson told Accountants Daily.
The ATO will be using its existing and standard processes to address unexplained wealth and “conspicuous consumption” that may arise through profits derived from cryptocurrency investment.
The tax office is also set to receive data from financial intelligence agency AUSTRAC. Recent changes to the Anti-Money Laundering Counter-Terrorism Financing Act, spearheaded by AUSTRAC, are designed to provide the ATO with data which identifies participants in the market and income that may be subject to capital gains.
Further, the ATO said it will continue to review and update its guidance related to cryptocurrency. As previously reported, it is currently engaging with industry stakeholders on the matter.
Chartered Accountants Australia and New Zealand’s tax leader, Michael Croker, similarly expects the ATO will be very public about monitoring cryptocurrency tax obligations this year.
“I expect the ATO will be in outreach mode, telling taxpayers that cryptocurrency activity has tax consequences, and warning of big penalties for non-disclosure,” Mr Croker said in a social media post this week.
“At least initially, those engaged in crypto activities will attract a high ATO risk rating and direct follow-up contact is likely - chartered accountants preparing tax returns, be warned,” he said.
Resources for you and your clients
The tax office and related agencies have issued guidance on cryptocurrency. Of note, these include:
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