The Australian Tax Office (ATO) is encouraging accounting professionals to engage with their clients on their cryptocurrency related activity.
The ATO acting assistant commissioner, Sylvia Gallagher, confirmed that people as young as 18 years were getting involved in cryptocurrency trading and that the authority was paying attention.
Cryptocurrency trade reportedly increased by 64 percent in 2021 as over half a million Australians engaged in trading digital coins. The ATO is reminding taxpayers that data matching is ongoing, and efforts are being made to ensure no activity slips past them.
Sylvia Gallagher outlined that much information had already been collected and would be used to ensure a level playing field as taxpayers met their obligations.
Sylvia Gallagher further flagged three types of transactions that required recording on returns. This included selling or gifting of cryptocurrency, trading or exchanging cryptocurrency, and converting crypto into fiat money.
It was outlined that depending on the situation, different tax measures will apply. For instance, where crypto was transferred from one wallet to another without a change in ownership, no capital gains tax (CGT) would apply. The ATO website explains that “if your cryptocurrency holding reduces during this transfer to cover the network fee, the transaction fee is a disposal and has capital gain consequences”.
For a cryptocurrency that is disposed of as part of business assets, the profit was assessable as income and not CGT. Businesses that received payment in the form of crypto should also consider this as part of their income and value it in Australian dollars.
Sylvia Gallagher however confirmed that gains and losses made from trading in crypto designated for personal use were not subject to CGT. She advised taxpayers to refer to the guidelines posted on the ATO website on the tax treatment of cryptocurrency transactions.
The ATO and other State & Federal government revenue authorities in Australia will continue to find new ways to deal with those taxpayers that are not paying their fair share of tax or meeting their financial compliance obligations – more than ever that applies to cryptocurrency trade.
As official reviews, audits, investigations, and inquiries of taxpayer lodged returns and their taxation affairs in general continue to remain prevalent, the best course of action is to ensure that your accounting firm has a comprehensive tax audit insurance solution such as Audit Shield in place.
ATO Encourages Accountants to Take Cyber Security More Seriously
The Australian Tax Office (ATO) has spoken out about the increased frequency of scams taking place across Australia. The ATO emphasising that accountants should be doing more to strengthen their digital systems as the risks for taxpayers rise.
Scams, identity theft and fraud are becoming an increased threat and the ATO said practitioners should review their cyber-security arrangements this year.
ATO assistant commissioner Darryl Richardson said accountants are already involved in system and process changes with new client verification guidelines developed by the ATO and TPB.
Mr. Richardson also believes that it is important for accountants to continually review the processes in place, both across the firm and for clients.
“It is worthwhile having to think about the controls that are in place, in your practice, and when you are interacting with clients. What does it actually look like, how does it feel,” says ATO assistant commissioner Darryl Richardson.
Unfortunately, we do see circumstances such as where the client is dismissive of the client verification process, or whether they are not forthcoming with information that is asked of them, or even things like applying pressure or documents that appear to be fake, or otherwise unusual. I think agents understand, and they apply at least the minimum guidance, or the minimum action, but it is worthwhile reflecting on the sorts of things that we do see,” continued Mr. Richardson.