Rules that came into effect yesterday mean that cryptocurrency exchanges will need to sign up to a new Digital Currency Exchange Register, and transactions exceeding $10,000 must be reported to AUSTRAC in line with the existing rules for bank transfers and cash transactions. You can read more about this here.
HLB Mann Judd tax partner Peter Bembrick believes the new measures will mean clients have to better understand their tax implications when dealing with cryptocurrencies, as government agencies seek to close out any tax loopholes.
“It is much more likely that cryptocurrency transactions will come to the attention of the ATO, and people will need to be ready to explain not only where the money came from, but also to show that they have followed the ATO’s rules.
“There are a number of areas that may catch people by surprise, if they haven’t done their research. It’s never a good idea to fall foul of the ATO and, as always, ignorance of the rules is not considered an adequate defence for failing to pay the appropriate tax.”
Mr Bembrick’s warning comes off the back of several strong warnings from the ATO for taxpayers to review cryptocurrency guidance ahead of tax time 2018.
“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 earlier this year.
More recently, the ATO has stressed that where an SMSF transacts in cryptocurrencies, precise record-keeping will be crucial to the audit and compliance process.
“SMSFs involved in acquiring or disposing of cryptocurrency must keep records in relation to their cryptocurrency transactions. There are also super regulatory considerations for SMSF trustees, members and SMSF auditors,” the ATO said.
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Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.