Australian crypto investors must report their profits to the Australian Tax Office or face penalties for tax evasion, assistant commissioner Tim Loh told local media outlet news.com.au. Cryptocurrency investments are treated in the same way as shares under the capital gains tax framework, which many Australians are unaware of. The same is applicable while investing in non-fungible tokens (NFT).

Australian Crypto Investors Must Report their Returns

The Australian Tax Office (ATO) has urged investors to report gains or losses made on cryptocurrency investments.

Under Australian federal law, cryptocurrencies are taxed as a form of property and are subjected to the same regulations under capital gains along with non-fungible tokens.

“We follow the money trail back to the taxpayer and we do that through the ATO which has data matching profiles with cryptocurrency exchanges. They provide that information to us and we use that information to cross-match with people’s tax returns.”

ATO, assistant commissioner, Tim Loh says that crypto is classed as an asset and not a currency, and so is taxable, something which many investors are unaware of.

Last year, the ATO directly contacted around 100,000 taxpayers who had traded in cryptocurrency and prompted 140,000 taxpayers to lodge their returns.

“This year, we will be writing to around 100,000 taxpayers with cryptocurrency assets explaining their tax obligations and urging them to review their previously lodged returns,” Loh said.

Australian Authorities Tracking Users Crypto Investments

Reportedly, the tax department will also be asking around 300,000 people filing their 2021 tax returns to report their cryptocurrency capital gains or losses.

Despite the anonymity of cryptocurrencies, Australian authorities have been able to track down crypto investments by comparing tax return details with data provided by crypto exchanges, banks, and other financial institutions.

“While it appears cryptocurrency operates in an anonymous digital world, we closely track where it interacts with the real world through data from banks, financial institutions, and cryptocurrency online exchanges to follow the money back to the taxpayer. There isn’t a game of hide and seek. We have got that information and all we are asking people to do is follow the rules.”