The Australian Taxation Office (ATO) is set to issue warnings either by letter or email to about 350,000 individuals in the country, in order to remind them of their tax obligations for trading digital currencies, like Bitcoin.
Cryptocurrencies in the country are seen as a form of property; hence, they are subject to capital gain tax. Therefore, any financial gains incurred from trading of cryptocurrencies must be reported to the tax authority and also placed under capital gains tax.
As revealed by ATO's spokesman to news.com.au, the warnings might be issued in the coming weeks. Investors in the cryptocurrency have to keep accurate records when they trade or buy and sell digital currencies, to make it easier during tax time.
The records should include several details, such as exchange records, receipts of purchase or transfer of digital currency, records of agent, digital wallet records and keys, accountant and legal costs, the date of the transactions.
Additionally, during the tax report, the individuals are expected to provide data on the value of the digital currency they traded in Australian dollars at the time of the transaction as well as the purpose of the transaction and who the details of the other party.
"In April last year, we published our Data Matching Protocol for cryptocurrency. Under this program, we obtain cryptocurrency transaction data from currency exchanges on taxpayers who have bought and sold cryptocurrency," the spokesman said in the report.
Through the details obtained from the Data Matching Protocol, ATO discovered that most people aren't aware there is a tax obligation for trading cryptocurrency, due to their complex nature. So, the letters to be issued to Australians are designed to raise awareness and ensure better tax reports.
Meanwhile, those who sold any digital currency during the 2017/18 financial year might be contacted by ATO, according to the spokesman. They might have to review their return and report the correct capital gains amounts on their income.
Recently, tax experts in Korea proposed that the country should apply a low level of trading tax first, before actual transfer income taxation.
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