crypto trading and tax

ATO sounds warnings over crypto trading and tax avoidance

One of the best things about being an expat is the freedom to pursue the life you want beyond the borders of your homeland. That freedom is also one of the big attractions of investing in cryptocurrencies, which are free from the traditional strictures for national currencies like the Australian dollar, US dollar and the British pound.

Among our clients here at Expat Tax Services, we’ve witnessed many expats broadening their investment choices by including cryptocurrencies in their investment strategies.

But as tax season approaches, the Australian Tax Office is sounding warnings over how crypto investment is reported. And it’s also putting investors on notice about a potential AUD$770 million hole in its collection numbers, signalling a crackdown on tax avoidance.


Being forewarned is forearmed, so here’s a quick guide to the big issues the ATO is flagging, and what that means for Aussie expats preparing their Australian tax returns.

Crypto reporting reminder

The ATO says it’s getting in touch with up to 350,000 Australians by email or snail mail to remind them of their crypto trading and tax reporting obligations if they invest in cryptocurrencies.

Assets like Bitcoin are classified by the ATO as a type of property that’s considered an asset eligible for capital gains tax. Any gains made from investing in crypto, must be reported to the ATO under the capital gains banner. If you’re a taxpayer who’s trading cryptocurrencies (with a view to profits), those profits will need to be taxed as ordinary income (not taxed as capital gains).

This also covers converting any crypto gains into Australian dollars or another international currency to buy goods and services.

Bridging the tax gap

As explained above, there’s a hole in the ATO’s numbers between its prediction of how much tax it will rake in and the final amount actually brought in. This ‘tax gap’ is reckoned to be around AUD$770 million dollars and is mainly attributed to what the ATO says are artificial and non-commercial arrangements.

Now, this shortfall is mostly being investigated for high net worth individuals and private wealth groups who control AUD$50 million or more, but those under the threshold will be investigated too.

A special unit is being set up by the ATO to monitor the crypto trading and tax/financial reporting of these groups and people, but the ATO says it will also be looking more widely at the compliance of the small business sector.

What Australian expats can do

For cryptocurrencies, the wisest thing for any expats (who have invested in these instruments) to do, is to ensure you report them to the ATO correctly and keep very thorough records of every crypto-related transaction you make.

If you are doing the reporting yourself make sure it’s done to the letter. But if it’s all too complicated, a smart choice would be to get enlist the help of our team here at Expat Tax Services. We’ve got the experience and the knowledge to ensure that you achieve the optimal outcome for your Australian tax return.

And as the for tax gap, ABC News reported that the ATO’s deputy commissioner Tim Dyce said most high-wealth individuals take their obligations to the tax man seriously and if any mistakes are made they often self-correct.

With that in mind, regardless of your asset levels, it’s vital that you thoroughly review your investment and financial arrangements to make sure they follow the very latest tax rules and don’t fall foul of the collectors.


If you need assistance with your crypto reporting/calculations and your Australian tax return, why not reach out to our Expat Tax Services team today?

Shane Macfarlane CA
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