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Last week, the Australian Tax Office (ATO) sent letters to hundreds of thousands of Australian citizens requesting them to report any and all cryptocurrency trading activity they have conducted starting from 2017. The letter states that, according to Australian law, cryptocurrencies are labeled as property and are therefore subject to capital gain tax similar to stocks and regular currencies.
The letter also states that those who had any contact with cryptocurrencies, need to calculate the monetary value of those currencies at the time in Australian Dollars. Therefore, not only do crypto investors have to go through multiple crypto exchanges in order to determine the legitimate pricing of Bitcoin at the time of their purchase, but they also have to calculate the exact monetary value of their past purchase with the exchange rate of the AUD today.
That is quite a lot of hard work that many people simply will not do, hence the whole tax evasion conundrum in the first place.
What classifies as crypto trading?
The letter doesn’t necessarily state what citizens need to include in their records. All it says is that:
The citizen must have a receipt for the purchase or transfer of cryptocurrency
Exchange records of his or her activity
Information on any additional legal or accounting costs
A record of his or her digital wallet activity as well as keys
Digging up all of this information for tax submissions is either going to be very hard or impossible for most traders as the vast majority of Australians are retail crypto traders rather than institutions actually keeping accounting and legal reports.
Furthermore, the ATO does not disclose what sort of purchase classifies as crypto trading. It is obvious that trading on exchanges or buying directly are included in the letter, but what about intermediaries?
As known, Australia has one of the largest iGaming scenes in the world, which became powered by cryptocurrencies around 2018. Thousands of Australian customers have purchased or had been given cryptocurrencies on their accounts by these companies as a means of initiation. In fact, around 60% of the top casino bonuses in this country were conducted via Bitcoins, stablecoins or platform-friendly tokens. Because of this particular case not being mentioned in the letter, it may be confusing for thousands of Australians whether or not they should classify the cryptocurrencies they have on their gaming accounts right now. In fact, there might not even be any repercussions if they don’t.
A recurring trend in the world
It seems that the whole world is starting to take the taxation of cryptocurrencies seriously. We’ve seen the United States Internal Revenue Service send similar letters to their citizens, as well as the Ukrainian government warning several investors. Same goes with Denmark.
The UK could be classified under the same recurring theme, but their crypto tax activity had more to do with corporations rather than retail investors. But it still did lead to private crypto traders through crypto exchange logs of individual customers.
Overall, should these countries display that there is money to be made through crypto taxations, it’s likely that every single legitimate government all over the world will start pursuing the same goals within a year.
Image courtesy of Bitcoin Exchange Guide
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