ATO crack down on cryptocurrency

James Riley
Editorial Director

The ATO is investigating measures to ensure that cryptocurrency investors and traders are paying the right amount of tax on their investments.

The agency has confirmed that it is currently engaging in “external consultations” on the issue, and will conduct a workshop in February with “key advisers” including tax experts, lawyers and specialists in technology, banking and finance.

“The creation, trade and use of cryptocurrencies is a rapidly evolving area. The ATO is continuing to work proactively both domestically and internationally to identify and respond to any issues related to the tax implications of cryptocurrencies, whether as a result of new types of transactions, new structures or new participants entering the increasingly digitised environment,” an ATO spokesperson said.

Danielle Szetho: Tax authorities should talk to the industry before making announcements

“Currently, the ATO is seeking to meet with key advisers, including tax experts and lawyers who have an interest in cryptocurrencies. This meeting will explore common queries from clients, practical issues and the tax implications arising from current cryptocurrency transactions and anticipated developments.

“This will help inform the ATO’s strategy for supporting the community in understanding their tax obligations, including any further advice and guidance required to improve the client experience.”

Recent months have seen a huge increase in the interest and hype surrounding digital currencies like Bitcoin and Ether. This has put a further obligation on the ATO to determine the associated tax liabilities and how tax is applied to Bitcoin investments.

In Australia, Bitcoin and other cryptocurrencies are currently not recognised as a form of money or foreign currency, and are instead viewed as assets for the purpose of capital gains tax, as the ATO clarified in a guidance paper released at the end of last year.

Anyone transacting Bitcoin or other digital currencies is advised to keep the dates of the transactions, the amount of Australian dollars transacted, what the transaction was for and who the other party was.

“Generally, there will be no income tax or GST implications if you are not in business or carrying on an enterprise and you simply pay for goods or services in Bitcoin,” the guidance states.

“Where you use bitcoin to purchase goods or services for personal use or consumption, any capital gain or loss from disposal of the bitcoin will be disregarded provided the cost of the bitcoin is $10,000 or less.”

FinTech Australia chief executive Danielle Szetho said the ATO must consult with the industry before making announcements like this.

“While we welcome the interest from the ATO in digital currencies, we do think there is a need for the ATO to consult with industry before important announcements,” Ms Szetho told

“For instance, the ATO recently released additional guidance on capital gains tax, and whilst we appreciate further guidance given the clarity if provides, we would have preferred the ATO undertake further consultation with industry before releasing it.”

Ms Szetho said Fintech Australia has reached out to the ATO about the cryptocurrency consultations.

“We have reached out to the ATO and are very keen to be part of such a taskforce, along with receiving further clarity about who is on the taskforce and how it will operate,” she said.

“Australia is recognised worldwide as a progressive blockchain market, and this reputation has come from a close working relationship between industry, government and regulators to strike a balance between innovation and investor protection.”

The federal government has followed through with a number of policies last year focusing on legitimising digital currencies and ensuring they abide by existing laws and regulations.

The government successfully passed legislation removing the double taxation of digital currencies like bitcoin, retroactively backdated to the start of this financial year. It also passed amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act which closed a “regulatory gap”.

This brought digital currencies under the remit of Austrac, making cryptocurrency platforms subject to the same reporting and regulatory obligations as the major banks.

These bills marked the first time that cryptocurrencies were recognised and regulated by the federal government.

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