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SKY UPDATE | ATO CRYPTOCURRENCY DATA-MATCHING 

May 9 2024

Despite the ups and downs and scandals, cryptocurrency has firmly established a presence in the Australian and Global financial landscape. 

With widespread take-up from both retail and institutional investors, cryptocurrency is now widely accepted as a legitimate investment asset. 

Despite the ubiquity of cryptocurrency in Australia, the taxation treatment of transactions is often not well understood and accurate reporting in tax returns is a live issue for the ATO. 

Understanding Cryptocurrency Taxation: 

As expressed in Taxation Determination TD 2014/26, the ATO considers cryptocurrency to be an asset, not money/currency.  

As such, transactions involving cryptocurrency are typically subject to the Capital Gains Tax (CGT) regime. 

However, it should be noted that cryptocurrency held for the purpose of sale or exchange in the ordinary course of business, will be treated as ‘trading stock’ under the Income Tax Assessment Act 1997.  This can include use of cryptocurrency in a business to buy or sell goods/services.  It also can include activities like cryptocurrency trading, mining or exchange businesses.  

Taxable Events: 

Common events/transactions that will give rise taxable events include: 

Selling Cryptocurrency: When you sell cryptocurrency for fiat currency (eg Australian dollars). 

Exchanging Cryptocurrency: Exchanging one cryptocurrency for another will result in the disposal of an asset/trading stock that will trigger a taxable event.  

Using Cryptocurrency for Goods or Services: If you use cryptocurrency to purchase goods or services, the transaction is regarded as a disposal of an asset/trading stock that will trigger a taxable event.  This can include purchasing/loading gift or debit cards. 

It is important that detailed records of cryptocurrency events are maintained to ensure that the tax outcomes can be accurately calculated and reported.   

These records should include the Australian dollar (AUD) value of transactions entered into and any associated transaction costs. 

The ATO have some useful web-content explaining the tax treatment of cryptocurrency assets that is well worth a reading for investors and traders alike.  

Data Matching: 

The ATO employs data-matching initiatives to ensure taxpayers accurately report cryptocurrency transactions in their Australian tax returns. 

This includes collecting data from ‘crypto designated service providers’ (eg cryptocurrency exchanges) to identify individuals and the details of:  

  • bank accounts; 
  • wallet addresses; 
  • transaction dates; 
  • transaction time; 
  • transaction type; 
  • deposits; 
  • withdrawals; 
  • transaction quantities; and  
  • coin type. 

A Gazette Notice was published on the 26th of April detailing the ATO’s data-matching program covering the 2023/24 to 2025/26 financial years. 

The ATO anticipate that this program will collect data for between 700,000 and 1.2m taxpayers annually. 

Conclusion: 

With the ATO gathering significant data on cryptocurrency transactions, it is important to understand the tax rules and report transactions accurately in tax returns. 

Having a good working knowledge of the tax rules does not only support compliance.   

Savy investors and traders are well placed to make informed decisions to achieve the best possible after-tax outcomes. 

If you need assistance to understand the tax implications of your cryptocurrency investing or trading activities, please get in touch

Sky Accountants Ballarat

Phone: 03 5332 8855

Office Address: 902 Howitt Street, Wendouree, Victoria 3355, Australia

Postal Address: PO Box 2234, Bakery Hill, Victoria 3354

Sky Accountants Gisborne & Macedon Ranges

Phone: 03 5428 1400

Office Address: 45 Hamilton Street, Gisborne, Victoria 3437, Australia

Postal Address: PO Box 270 Gisborne Victoria 3437