An Overview on the History of ATO and Cryptocurrency

The birth of Bitcoin in 2009 as the first cryptocurrency went seemingly unnoticed by the Australian Tax Office (ATO). In the coming years, the market cap of this asset class grew at an unprecedented rate and thousands more cryptocurrencies were made available across the globe. However, many investors have been making trading decisions without considering how the ATO will treat cryptocurrency trading.

However, 2014 saw a change to this. As the popularity of crypto began to rise, the ATO began to notice.

The ATO and Cryptocurrency in Today’s World

In present day, nearly 20% of Australians had dabbled in cryptocurrency. This new hype caught the eye of the ATO, bringing about a slew of new tax obligations.

The ATO wants a chunk of this no doubt. During the huge cryptocurrency rally of 2017, they joined other countries in announcing tax regulations to the sector. From here on, the ATO started treating cryptocurrency like it would a normal stock. Even going to the length of using data-matching programs that collected cryptocurrency transactions from five years ago in 2019.

During 2021, the ATO sent out letters to several investors. These letters warned them of the consequences of not reporting gains from cryptocurrency on their tax returns.

ATO and Dealing with Cryptocurrency Scams

The ambiguous nature of the ‘crypto’ field also makes it a breeding ground for scams. With almost anyone being able to start a new cryptocurrency, it becomes important to understand how officials deal with it.

If you are caught in a cryptocurrency scam, you will be required to provide the ATO with any evidence you can find. This helps the ATO identify if you have suffered a capital loss. You can achieve this by proving you were the sole controller of your cryptocurrency. Keep in mind that in instances like this, you will also be disclosing your identity and history of cryptocurrency trading to the ATO.

What do Cryptocurrency Investors Need to Do?

As the ATO views crypto as an asset, it becomes subject to Australian tax rulings. A few obligations a crypto investor may face include:

• The ATO viewing cryptocurrency as an asset and property for taxing.
• CGT applying for cryptocurrency gains. Gains include: using cryptocurrency to pay for goods and services or even gifting cryptocurrency.
• CGT discount of 50% applies for cryptocurrency held for one or more years.
• Income from cryptocurrency is liable to tax similar to regular salary.
• Individuals who trade cryptocurrency or businesses that accept it as monetary exchange need to report gains on their tax return.

Finally, investors should also educate themselves on whether they will be viewed as an investor or trading business by the ATO, depending on how active they are.