Australia’s official taxation department has opened a public consultation to hear feedback about its tax guidelines on cryptocurrencies.
In a statement this week, the Australian Taxation Office (ATO) confirmed an update of its cryptocurrency tax guidance after admitting to fielding a number of community queries ‘about how to approach specific tax events.’
In light of the increasing number of queries from the public at large, the ATO has now launched a ‘community consultation’ which it says will ‘help us understand practical issues experienced when complying with cryptocurrency tax obligations.’
The ATO added:
The purpose of this consultation is to seek feedback on practical compliance issues arising from complying with taxation obligations in relation to cryptocurrency transactions. In particular, we are interested in any practical issues that may impact on taxpayers’ abilities to calculate and substantial any capital gains and losses for capital gains tax (CGT) purposes.
The updated guidance pivots from previously describing cryptocurrency – specifically highlighting bitcoin as an example – as an ‘intangible property’ to now deeming it a property and ‘an asset for capital gains tax (CG) purposes’ alongside a more detailed overview of the tax treatment of cryptocurrencies used in a number of instances by both individuals and businesses. More specifically, investors who see capital gains after exchanging one cryptocurrency to another will now be subject to tax liabilities.
‘Records need to be retained for each transaction, in accordance with the recordkeeping rules,’ the ATO’ explained. “This means that each item is separately accounted for and recorded when it is acquired and disposed of, with relevant Australian dollar values recorded.”
The taxation authority insisted on record keeping for every single transaction involving a crypto-to-crypto exchange. Further, the ATO has also mandated record-keeping of the following details in any cryptocurrency transaction.
- Date of the crypto transaction
- Value of the cryptocurrency in Australian dollars at the time of the transaction; and
- The purpose of the transaction and the recipient’s details, even if it is merely their cryptocurrency address.
The public consultation, which runs until April 20, comes after the Australian government put an end to the double taxation of transactions involving cryptocurrency in October, nearly two years after initially pledging to kill the controversial double tax.
Meanwhile, the ATO is reported to deploy a ‘100-point identification check system’ that will enable the authority to tap into data-matching techniques to investigate tax filings by cryptocurrency investors.
Featured image from Shutterstock.
Last modified: March 4, 2021 5:06 PM