The Australian Tax Office (ATO) is ramping up its efforts to catch crypto tax dodgers by collecting transaction data from 2014 to 2026. As the tax season approaches, investors must ensure proper filing to avoid penalties.

Australia’s Crackdown on Crypto Tax Dodgers: ATO Collects Over a Decade of Transaction Data

The Australian Tax Office (ATO) is intensifying its scrutiny on cryptocurrency transactions, targeting those who have failed to properly report their crypto gains. As the financial year ended on June 30, taxpayers are now in the process of lodging their tax returns. The ATO’s comprehensive data-matching program, which collects information from 2014 to 2026, aims to identify and penalize tax evaders.


ATO’s Heightened Focus on Crypto

Over the years, the ATO has increasingly focused on cryptocurrency transactions, and this year is no different. Adam Saville-Brown, the general manager of Koinly, a crypto tax reporting software, emphasized the ATO’s vigilance. "The ATO has kept a keen eye on crypto in recent years — and this year is no exception," Saville-Brown told Cointelegraph.


Michelle Legge, head of tax education at Koinly, explained that the ATO’s data-matching program has been revamped to collect data from any crypto exchange legally operating in Australia. This includes major platforms like Binance, Coinbase, and CoinSpot. The ATO expects to gather extensive information, including names, addresses, emails, social media accounts, and IP addresses of approximately 1.2 million crypto investors each year.


Saville-Brown noted that while most Australian crypto investors are aware of their tax obligations, the enhanced program is likely to catch those who have yet to comply fully. Those failing to report their transactions correctly may receive reminders from the ATO to rectify their filings.


Challenges in Reporting Crypto Refunds

One of the complexities in this tax season revolves around the repayments from the bankrupt American crypto lender Celsius. The ATO’s current guidance does not clearly address how to handle these Bitcoin (BTC) and Ether (ETH) refunds, leading to potential confusion among investors.


Crypto deposits can trigger taxable events, which might result in gains for some investors depending on their purchase price. However, the challenge lies in calculating the exact gain or loss. Legge pointed out the uncertainty surrounding which figure to use as the cost basis. The ATO has not clarified whether investors should use the original purchase price, the value at a specific point in time, or another method.


Due to this ambiguity, Saville-Brown recommends consulting with an experienced accountant to determine the correct tax liability. Depending on the circumstances, the refunds could be considered taxable gains or losses.


Bitcoin ETFs and Tax Implications

Australia’s introduction of two spot Bitcoin exchange-traded funds (ETFs) this month marked a significant milestone for the country’s crypto market. One of these ETFs directly holds Bitcoin, while the other launched on the country’s largest stock exchange. Despite these advancements, existing tax laws continue to apply.


Investors must pay Capital Gains Tax (CGT) whenever they sell holdings from a Bitcoin ETF and make a profit. Legge highlighted that while the launch of Bitcoin ETFs is a positive step for cryptocurrency adoption in Australia, it still results in a tax obligation for investors.


The Path Forward

The ATO’s proactive approach in monitoring cryptocurrency transactions underscores the importance of compliance. As the agency collects extensive data from exchanges, it becomes crucial for crypto investors to accurately report their gains and losses to avoid penalties.


For those navigating the complexities of crypto taxation, seeking professional advice is advisable. An experienced accountant can help ensure that all transactions are reported correctly, including handling refunds from bankrupt entities like Celsius.


As the ATO ramps up its efforts to collect over a decade of crypto transaction data, Australian investors must be diligent in their tax reporting. The enhanced data-matching program aims to catch tax evaders, and those who fail to comply could face significant consequences. With the evolving landscape of crypto taxation, staying informed and seeking professional advice is essential to navigate this complex field effectively.


Stay tuned to OMGfin for the latest updates on crypto regulations and how they impact your investments.


(JESSE COGHLAN, COINTELEGRAPH, 2024)