Australian cryptocurrency investors are on alert as the Australian Taxation Office (ATO) intensifies its scrutiny of crypto-related activities. With the end of the financial year approaching, the ATO is employing advanced data-matching techniques to ensure compliance, potentially leading to surprise audits, considerable tax bills, or even formal investigations for those who fail to accurately report their crypto dealings.

ATO’s Data-matching Blitz

The ATO’s “blitz” involves collecting data from Australian cryptocurrency service providers to monitor trading activities. Koinly CEO Robin Singh emphasized that cryptocurrency is no longer “invisible” to the ATO. If you think the ATO isn’t watching, you’re already at risk. He added:

Whether you made $10 or $10 million, the ATO’s data-sharing with crypto exchanges means they know you’ve had crypto activity throughout the financial year. And they’ve been tracking data for years.
Robin Singh, CEO of Koinly

This data includes detailed facts on cryptocurrency purchases and sales, with the ATO operating a crypto data-matching program since April 2019.

Capital Gains Tax Implications

Most cryptocurrency transactions, including buying, selling, swapping for fiat currency, or exchanging one cryptocurrency for another, are subject to capital gains tax and must be reported.Investors may incur either a capital loss or a capital gain, both of which must be included in their tax returns. A 50% capital gains discount may apply if the crypto asset has been held for 12 months or more.

Expert Insights on Market Volatility

Blake Cassidy, CEO of micro-investment app Bamboo, noted the volatility in the crypto market over the past year due to broader economic conditions. Bitcoin has been steadily trending up due to institutional adoption, while alt coins such as Solana and Ethereum have had relatively poor performance. He stressed the importance of accurate record-keeping:

It is crucial for Australians to record both their crypto gains and losses due to the ATO treating cryptocurrency as property for capital gains tax purposes.
Blake Cassidy, CEO of Bamboo

Consequences of Non-Compliance

Singh warned that failing to report or underreporting crypto activity could lead to serious repercussions. Audits, penalties, or even criminal investigations are potential outcomes for those who do not comply. He emphasized that even small transactions can trigger scrutiny:

Even small sells, or trades from just a few dollars can trigger scrutiny. Unlike stocks,the ATO doesn’t automatically have all your crypto transactions on hand,but thanks to data-sharing with crypto exchanges,any crypto activity,no matter how small,will trigger an alert.
Robin Singh, CEO of Koinly

He also cautioned that ignoring potential gains or losses could lead to an audit, especially if you’ve held crypto for years without declaring any sales or trades.

Reporting Requirements and Misconceptions

Even if you have never sold, disposed of, or earned crypto through staking or airdrops, it is essential to understand your reporting obligations. Singh clarified a common misconception:

One of the biggest misconceptions is that crypto is only taxable when converting to cash, but the ATO treats every sale and swap as a capital gains event, while staking rewards and airdrops may be taxed as ordinary income.
Robin Singh, CEO of Koinly

the ATO provides an online calculator and record-keeping tool to assist in calculating capital gains tax.

crypto Ownership in Australia

Independent Reserve data indicates that nearly a third of Australians, or 6.2 million people,currently own or have owned cryptocurrency.