cryptocurrency crackdown

How will the ATO’s cryptocurrency crackdown affect expats?

Cryptocurrency investment and trading has been one a growing investment trend in recent years.

Investors across the world are putting their money into cryptocurrencies like Bitcoin and riding what has been a rollercoaster of ups and downs in a new frontier of investing. At the same time, there has been a common perception that because of its international and often anonymous nature, cryptocurrency investments could be free from taxation in Australia.

Definitely not!

And now that tax season is upon us again, the ATO is undertaking a cryptocurrency crackdown by taxing cryptocurrency investment while highlighting its tax rules for the sector. Australian expats who have cryptocurrencies in their investment portfolios or want to add some should take notice.

Cryptocurrency tax in Australia

Cryptocurrencies in Australia are considered as assets, so every time they’re bought and sold there’s potential for liability under capital gains tax. You’re free to buy things with, for example, a Bitcoin without paying GST, and crypto transactions are considered a barter arrangement in Australia – the ATO doesn’t recognise them as currency.

But if your investment in cryptocurrency jumps ten times in value and you sell your cryptocurrency (or convert it to a different coin), then the ATO considers that gain will be subject to capital gains tax. And regardless of whether, you’ll need to report capital gains and losses from crypto in your tax return.

If you need any more information, we’ve covered this topic in depth previously – take a look at:

Bitcoin and Australian tax – 7 questions answered.

The ATO turns the screw

To make sure the government’s coffers don’t miss out on any crypto capital gains taxes, the ATO recently announced (in April 2019) that it has begun collecting “bulk records” from Australia-based cryptocurrency exchanges.

SOURCEATO begins collecting ‘bulk records’ from Australian cryptocurrency exchanges to track down tax cheats

This data will be fed into the ATO’s data-matching systems to check that investors are correctly stating how much they’ve invested in crypto and how much they’re earned from it. The ATO said it’s looking at transactions and customer details across the 2014-15 to 2017-18 financial years and then right up to the 31st of March 2019.

What this means for Australian expats

Australian tax return season is upon us, and no doubt many expats are investors in cryptocurrencies right now or have been in the past.

No matter what, our advice at Expat Tax Service is to always ensure that you maintain good records of all your investments, including and especially your cryptocurrency assets particularly in light to the ATO’s recent announcement as outlined in the news.com.au article listed above.

If you have any doubts about your crypto investments, check out the an earlier article that we wrote explaining some of the issues guidelines for capital gains, which also go into detail about cryptocurrencies – Cryptocurrency tax issues and tax planning strategies.

Finally, if you have any questions, we’re always available to assist and to advise you and other Australian expats on any Australian tax query that you may have. Contact our team today.

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Shane Macfarlane

CEO & Founder at Expat Tax Services
Shane's an Australian Chartered Accountant and Australian expat tax specialist who's also an expat himself (based in Asia). Shane's passionate about tax and legitimate tax minimisation, tax-planning and structuring, particularly as it relates to Australian expats who are often subject to high rates of tax back home in Australia.
Shane Macfarlane
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