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H&R Block spies bitcoin spike as ATO puts in callout to accountants

H&R Block spies bitcoin spike as ATO puts in callout to accountants

The ATO is reminding accountants of its newly launched consultation group for tax professionals, created to get a handle on the tax compliance issues being posed by cryptocurrency.

Tax&Compliance Katarina Taurian 27 March 2018

The tax office is particularly interested in practical compliance issues that may impact on taxpayers’ abilities to calculate and substantiate any capital gains and losses for capital gains tax (CGT) purposes.

The scope of the consultation will be limited to record-keeping as it relates to cryptocurrency transactions and the implications of exchanging one cryptocurrency for another cryptocurrency.

In relation to record-keeping, the ATO is looking to find out if there are any practical issues that arise in relation to CGT record-keeping rules, and if there are any factors that should be taken into account when crafting further guidance about CGT record-keeping when it comes to cryptocurrency.

CGT compliance has been a priority area from day one, as many investors haven't understood that cryptocurrencies with characteristics similar to bitcoin are an asset for CGT purposes. 

This development comes as national tax and accounting network, H&R Block, finds a “huge number” of enquiries about SMSF establishment are being fuelled by interest in purchasing bitcoin.

Typically, enquiries to H&R Block about SMSF establishment are property-driven, but director Kimberlee Brown said investors are increasingly asking how to set up an SMSF to facilitate bitcoin trading.

“We have a huge number calling about bitcoin. They want to access some money for trading, and they see their super fund as a space to do that,” Ms Brown told sister publication SMSF Adviser.

Typically, the investors are in their 30s with low-balance funds, and they are principally motivated by bitcoin gains as opposed to managing their own superannuation.

H&R Block doesn’t offer them investment advice, but stresses the compliance and tax considerations of an SMSF, often catching prospective trustees by surprise.

“Obviously, any gains you make on your trading will be taxed — they are a capital gain. But some of the people we speak to just think it’s a free windfall,” she said.

“Also, there are certain costs and definitely responsibilities involved in setting up an SMSF, which we remind them of. That doesn’t seem to be a consideration,” she said.

The ATO has outlined its plans for cryptocurrency this tax time, which you can read more about here. 

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H&R Block spies bitcoin spike as ATO puts in callout to accountants
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