Place/Date: - August 12th, 2022 at 2:31 pm UTC · 3 min read
Contact: Koinly, Source: Koinly
Thinking that the ATO won’t find out about your crypto? Have a secret crypto wallet you don’t want to pay tax on? Think again. The ATO has eyes on your crypto, wherever it is. Koinly Australian Head of Tax, Danny Talwar, explains the risks and penalties of crypto tax evasion. He said:
“The ATO has crypto transaction data from as far back as 2014 and has repeatedly made it clear that they can track crypto. If you’ve sold, traded or earned cryptocurrency at any point, you’ll need to report it in your annual income tax return. Some investors are tempted to avoid paying tax on their crypto and wrongfully believe the ATO won’t find out about their crypto investments – but it’s not the case.”
So what should you do if you’ve made crypto investments over the last financial year and have been thinking about running from your obligations? Koinly explains.
Yes, the ATO can track cryptocurrency. So don’t think you can dodge your crypto tax bill without the ATO finding out.
Danny Talwar said:
“The ATO has a data-sharing scheme with designated service providers (DSPs). In Australia, crypto exchanges (including large exchanges like Binance, CoinSpot, Swyftx, and CoinJar) must register with AUSTRAC as a DSP to operate legally. This data sharing scheme goes back as far as 2014.”
Crypto is a key priority for the ATO in 2022, meaning they’ll focus on ensuring taxpayers report their crypto taxes accurately and pay any due tax liability.
In other words, if you’re thinking of not reporting (or underreporting) your crypto taxes – don’t. The penalties can be severe.
Whether you were unaware crypto was subject to tax previously, or you assumed the ATO would never catch up with you – it might be time to get things straightened out as soon as possible.
“The ATO has what’s known as a voluntary disclosure. You can use this to inform the ATO of any mistakes, inaccuracies or false statements in a previous tax return lodgement.”
However, using a voluntary disclosure doesn’t mean you won’t get any administrative penalty units (each penalty unit is $222). But in general, you’ll likely receive more favourable treatment than if the ATO finds out on their own that you have a shortfall in tax.
Crypto tax software can help ensure you know your tax liability throughout the entire financial year – so you’re not left with a surprise bill you can’t afford. Plus, it helps you accurately calculate and report your taxes to the ATO. It even helps you provide great records for the ATO should you ever be subject to a crypto tax audit.
Koinly’s Head of Tax Australia, Danny Talwar, noted:
“The ATO allows using tax software tools to help you calculate and prepare your crypto taxes. This helps ensure you pay the correct amount of tax and keep good records for the ATO should they ever request them.”
Koinly calculates your crypto taxes for you, catering to investors and traders at all levels. Whether it’s Crypto, DeFi or NFTs, the platform helps you save valuable time by reconciling your holdings to generate an ATO-compliant tax report in under 20 minutes. Sign up today and see how much you owe!
Disclaimer: Koinly is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how this information relates to your unique circumstances.