The Australian Tax Office (ATO) put out a statement addressing the country’s 600,000 crypto users to pay taxes on their gains during the next tax period.
The Australian government has initiated a clamp-down on crypto traders and crypto activity after finding a massive increase in investments from 2020.
The government has made it clear that the anonymous mechanisms of cryptocurrencies won’t hide or excuse Australian crypto traders from the taxman.
Assistant Commissioner Tim Loh explained that financial regulators will be tracking these traders through their bank accounts:
“We are alarmed some taxpayers think the anonymity of cryptocurrencies provides a license to ignore their tax obligations. While it appears cryptocurrency operates in an anonymous digital world, we closely track where it interacts with the real world through data from banks, financial institutions, and cryptocurrency online exchanges to follow the money back to the taxpayer.”
The ATO will use the data from bank accounts and extrapolate it with previous tax returns. This will make sure that traders are paying sufficient tax. The crypto assets will be taxed as income based on how much Australian dollars their cryptocurrency is worth.
The tax office will specifically contact over 100,000 cryptocurrency holders and will prompt over 300,000 others to report their capital gains or losses on their 2021 tax returns.
2021 has been an active year for Australian financial regulators as they scramble to create terms and conditions for the ever-changing field of cryptocurrency. The Australian Senate’s Select Committee on Australia as a Technology and Financial Centre announced in May that it will be exploring how crypto assets could be regulated in the country.
The parliamentary inquiry is looking into crypto regulation in an effort to strengthen the local fintech sector while encouraging financial innovation.
Regulators feel its an appropriate step, as cryptocurrency increases in popularity in the country. Reports indicate that some of the country’s wealthiest families have been buying up digital assets. This is supposedly their alternative investment to get returns, as opposed to stocks or bonds.