Like other transaction documents, you need to do treat cryptocurrency trading similarly, so the ATO is sure about your legitimate business affairs when you lodge tax returns. Recently, blockchain and cryptocurrency have received the front-page position in several newspapers, with the new applications, currencies and technologies being introduced. The ATO is sending alerts and is monitoring the crypto traders for ensuring they are correctly reporting their crypto gains.
Are you among the cryptocurrency traders? Then follow the guidelines stated in the guide as provided by the ATO for cryptocurrency recording. In contrary to the facts or matters people assume, cryptocurrency is captured in Australia' tax system in the country. So, as a matter of fact, the ATO is carrying out investigations on transactions dating back to 2014. So, in Australia, all the crypto-traders have to keep a record of their personal Cryptocurrency transactions, just like the other countries. The tax office is establishing measures in place for ensuring the crypto traders are tax compliant.
ATO Is Extremely Attentive To Specific Crypto Records
Technology has now eased out for ATO to collect data. Along with the basic personal information, the other highlighted data include -
* How crypto had been acquired
* Crypto's value on the day when it had been acquired
* The date when the crypto assets were used first for purchasing, trading or exchanging.
Wallet Address
Each time cryptocurrency is being sent to another wallet, then the transaction gets recorded. For each transaction, an entry is done with the wallet address and well as to the wallet when funds are being sent, maybe individual or business. All these transactions are even captured with the time and date stamps. Besides, all trades the trader makes in any transactions are documented.
Data Matching
Advanced data matching strategies are used for comparing the records as the cryptocurrency trader has provided the information from the third-party exchanges and such relevant sources. Ultimately, in all possibilities, the ATO will be detecting any anomalies in your tax returns. Hence, to do away with the discrepancies, work closely with a licensed tax accountant or a tax agent for lodging tax returns and continue with legal business dealings in Hobart. At the same time, you can avoid entering into problems with the ATO when you keep every record in a timely manner.
As stated by the Australian Securities & Investment Commission (ASIC), all the reporting entities should be submitting data to AUSTRAC, on being involved in cryptocurrency deals reaching the threshold of AUD$10,000 transaction. It should be reported within 10 business days.
What Will Happen to Improper And Incorrect Reporting of Crypto Gains?
Whenever you involve yourself in taxation subjected activities, then you will have an obligation for reporting these gains. But if it is neglected, then the ATO considers it as tax avoidance and accordingly treats it.
Added to it, ATO chooses imposing normal penalties for not reporting cryptocurrency activities on your income returns. Then, the penalties will be applicable despite not having the details on your cryptocurrency gains.
How Should Cryptocurrency Records Be Kept?
When you have to avoid paying unnecessary taxes and be safe from facing the other restrictions from the ATO, ensure keeping all the transaction records properly. These include -
* Where was it bought?
* On which date was it bought?
* How much money was paid for it?
* When did you use your cryptocurrency for purchasing, trading or exchanging?
The records should even include the individual's or business' details to whom the funds are being sent. If it is not done, then you are missing the vital tax deductions.
ATO's provided guidelines and recommendations ease it for avoiding penalties, and other cryptocurrency transactions and accounting related problems. Thus, following them closely is important. On consulting an accountant, you will need a profit and loss summary, and then with their help, you will be able to obtain a reporting from your portal showing the net profit and loss, and even differentiated between Trading profit/loss, Capital Gains or Loss.
It depends on the trading type you have done; it could be short term or long term. Because of the Crypto' complicated nature, the best way is taking advice from the tax accountant with regards to best managing the records. It could involve purchasing online software for making calculations easier and even less time-consuming.
When the time comes for lodging the tax return, then the ATO will look at your report and then make a comparison of its with their collected records from the Australian cryptocurrency designated service providers. Through this process, the ATO ensures you are being honest while disclosing your cryptocurrencies. So, you have to check for sure you are paying the right tax amount since the ATO knows it if your tax report is not matching your crypto transactions.
