Australian Tax Office Steps Up Crypto Scrutiny; Unclear Tax Implications for Celsius Refunds
Summary:
The Australian Tax Office (ATO) plans to closely monitor individuals who profited from cryptocurrencies ahead of the financial year ending June 30th. The ATO has launched a data collection program from legal crypto exchanges and anticipates collecting information on approximately 1.2 million crypto investors annually. Consequences are expected for those who fail to accurately report their crypto activities. Moreover, Australian Bitcoin ETF holders will still have to pay Capital Gains Tax on profits. Unclear tax implications around refunds from the bankrupt American crypto lender, Celsius, have also been highlighted.
As the end of the Australian financial year approaches on June 30, the Australian Tax Office (ATO) has an extra focus on individuals who have recently made profits from cryptocurrencies. This heightened scrutiny comes as people prepare to file their tax returns ahead of the July deadline. Adam Saville-Brown, who serves as General Manager of Koinly, a crypto tax software, shares that the ATO hasn't toned down its scrutiny on the crypto sphere – it remains just as alert this year.
In a newly introduced program, the ATO will collect data spanning from 2014 to 2026 from all legitimate crypto exchanges based in Australia. According to Michelle Legge, the Head of Tax Education at Koinly, this information extends to every user of Binance, Coinbase, Coinspot, and other platforms, as the ATO has access to all their data.
The ATO's approach is expected to yield large amounts of data, such as names, addresses, emails, and also identifying details from social media accounts and IP addresses of around 1.2 million crypto investors annually. Saville-Brown affirmed that despite most crypto traders in Australia being aware of their tax obligations, this thorough program could likely expose those who have not been fully compliant. The ATO will issue reminders via letters to those failing to accurately report their crypto dealings.
There's an added layer of complication related to refunds from the defunct American crypto lending service, Celsius, involving Bitcoin (BTC) and Ether (ETH). Saville-Brown stated that due to the ATO's unclear guidelines around such circumstances, users could face confounding tax implications resulting from the refunds. Crypto deposit refunds signify taxable events, leading to possible gains based on their purchase value. However, there's uncertainty among investors about how to determine their gains or losses and the exact figure to use as their cost basis. Legge shared the lack of clarity from the ATO about whether normal accounting procedures or alternative methods should be used.
A critical point of advice from Saville-Brown is to reach out to skilled accountants to understand the tax liabilities, as the refunds can result in either taxable gains or losses.
The recent launch of two Bitcoin Exchange-Traded Funds (ETFs) on the Australian market has not removed the traditional tax obligations. Legge pointed out that despite these new offerings enhancing the wider acceptance of cryptocurrency, they still lead to a tax charge. Investors who sell their holdings from a Bitcoin ETF at a profit will be liable for Capital Gains Tax as per the old legislation.
Published At
6/28/2024 9:11:25 AM
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