Connect with us

Cryptocurrency

ATO warns bitcoin cryptocurrency investors can’t avoid paying tax

Published

on

Don’t expect to play a “game of hide and seek” and win – that is the message for the more than half a million Aussies who have cryptocurrency investments.

It comes after the Australian Tax Office announced that it has renewed a partnership with the Australian cryptocurrency exchanges requiring them to hand over their trading data by 2022-23.

It’s part of a campaign by the ATO aimed at shattering the myth that cryptocurrency profits are tax-free or only taxable when holdings are repaid in Australian dollars – and its partnership with exchanges is helping it target taxpayers.

ATO Deputy Commissioner Tim Loh warned Aussies that investing in crypto is “not a game of hide and seek” as exchanges offer excellent data reconciliation capabilities.

“This is how we want to ensure that people meet their tax obligations with regard to cryptocurrency,” he told news.com.au.

“Cryptocurrency prices have skyrocketed in the past 12 to 18 months. Bitcoin was worth $ 13,000 in June last year, it was $ 80,000 in April of this year, and it is around $ 46,000 today. We know people will invest more in the years to come and we want to make sure people understand their tax obligations. “

RELATED: Aussies Could Get $ 2,600 In Taxes Back

He said around 550,000 taxpayers are expected to receive a pop-up message when filing their tax returns.

“We will remind taxpayers who own cryptocurrencies by sending a pop-up message when they file their own tax return through the myTax portal, or a message will be sent to their registered tax representative to remind them of profits and taxes Include losses in cryptocurrency, “he said.

“In some cases of outrageous behavior, we use this reconciliation protocol to use this information to select taxpayers for audits.”

What information does the ATO

The ATO closely tracks where cryptocurrency interacts with the real world through data from banks, financial institutions and cryptocurrency exchanges, he said.

Cryptocurrency is seen like other assets like stocks, and it’s really important to keep good records of how profits and losses are calculated, Loh said.

This includes the Australian dollar amount when you buy, exchange or sell cryptocurrency, transaction details, the purpose of the transaction, and details of the other party involved.

He said that there is great accounting software out there that can help people calculate their cryptocurrency profit or loss, while registered tax accountants could also help people who weren’t sure.

This year, the ATO will write to around 100,000 taxpayers with assets in cryptocurrency asking them to review their previously filed declarations.

RELATED: How to Get Your $ 1080 In Tax Back

That’s what the tax experts say

Crafting crypto can be a difficult task due to the wild fluctuations in value and it can be categorized in different ways.

Mardi Heinrich, KPMG tax partner, said the ATO is increasingly focusing on cryptocurrency profits and being able to closely track transactions through data from providers.

“If your crypto is not considered an asset for personal use, any disposal must generally be declared for capital gains tax (CGT) purposes and you may be eligible for a CGT discount if the asset was held at least 12 months prior to disposal” , she said.

The ATO states that cryptocurrency is a personal use asset if you acquire and use it within a short period of time and exchange it directly for items that you use or consume personally.

“In most situations, cryptocurrency is not an asset for personal use and is subject to capital gains. The longer you hold cryptocurrency, the less likely the ATO is to consider it an asset for personal use, ”she said.

She advised crypto investors to keep solid records of transaction data and values, and warned that a capital gains tax event is likely to still occur when transferring cryptocurrencies, even if you have not yet converted your crypto into a recognized currency.

According to tax advisor Moore Australia, most individuals would generally hold cryptocurrencies as capital gains tax credits.

“A key feature is the intention to hold the cryptocurrency as an investment for the long term,” they said.

For example, if you hold onto the cryptocurrency for more than a year, you will receive a 50 percent discount on capital gains tax on all subsequent profits.

But if you acknowledge a loss on your investment, it can only be offset in the current year, they said.

Why the exchanges cooperate

Caroline Bowler, CEO of BTC Markets, one of the largest platforms in Australia, said working with government organizations like the ATO, AUSTRAC and others is a normal part of doing business for an Australian company.

“It’s comparable to banks and other financial institutions in Australia and a sign of how quickly our sector has matured,” she said.

She agreed that the tax requirements for crypto are still a little complex.

“Given the complexity and rapid growth within crypto itself, this is to be expected while the traditional financial world evolved at a much slower pace,” she said.

“It is important that the ATO is ready to advise and understand each other as part of this process. That is an encouraging sign. “

In fact, Ms. Bowler’s own accountant was contacted by the ATO last year to ensure she was declaring her profits and losses in cryptocurrency.

“I’m happy to confirm that my taxes were all up to date,” she said.

The ATO has published a fact sheet that helps investors with their tax obligations in relation to cryptocurrencies.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Cryptocurrency

Cryptocurrency may be tender of choice in future, but is risky investment now | Opinion

Published

on

Cryptocurrency is taking the nation by storm, with digital currency attracting the attention of large companies and meme traders trading based on popular internet trends. Some financial advisors advise their clients to buy in, while others are not as optimistic.

Although crypto is likely to grow in importance in the future, it currently remains a risky investment as it is too unstable and overshadowed by many uncertainties.

Crypto was developed as a payment method that can bypass traditional banking systems. New crypto is created through mining, a process by which computers solve difficult math problems. There are thousands of flavors of crypto, but Bitcoin is dominant, taking almost half of the market share.

One problem with cryptocurrency is that certain coins are available indefinitely, which means that an infinite amount of crypto could be mined at infinite time. This has led to inflation in the crypto markets, which can also happen with physical currency.

This problem alone is not enough to warrant a hold or sell rating, but what is even more worrying is that cryptocurrencies are being propelled by meme trading. This trading style is named after an online community of merchants who have gathered around “stonks” like GameStop and AMC Entertainment Holdings who have supported low-value companies through the Reddit site r / wallstreetbets.

When meme traders focus on one company, they are quick to invest to drive the stock price higher. Then, when the stock appears to have peaked, investors quickly sell their holdings in a process known as “pump and dump”. This type of trading is detrimental to the markets and can result in significant losses for both large companies and individual traders. Crypto has become a preferred investment for meme traders, making it riskier and less reliable.

Another factor to consider before investing is how quickly crypto values ​​can go up and down. When Elon Musk tweeted about the Dogecoin cryptocurrency, the price fluctuated sharply. This is a bad sign for cryptocurrency coins because if negative news got out about them, their prices could go down and the investment would be lost.

Some companies are optimistic about crypto as an investment, including the El Salvador government, which introduced Bitcoin as its national currency. The move showed that cryptocurrencies are likely to be widely used in the future, but it also highlighted some of the risks associated with investing at this early stage.

When El Salvador started using Bitcoin, the government had to take its e-wallet offline for several hours when the server was overloaded, which revealed a bug in the system. Crypto is only good if it can be used, and if the servers are overloaded it cannot be used. In the future, this problem could be resolved, but until then, crypto is still an unreliable and dangerous investment.

Another major problem with crypto platforms was uncovered when they mistakenly gave users nearly $ 90 million worth of various crypto coins during a routine update in late September. The error was caused by a bug in the computer code and prompted the workers to recover the lost coins.

Both incidents show that this technology is too new and unreliable to be a safe investment. There are thousands of other investment options with far less risk and almost the same return, including stocks and options.

For now, investors should stay away from crypto, but it will become a viable investment in the future. Technology is improving rapidly and culture is changing. One day cash may be a thing of the past and crypto may be the king of currencies, but that day is not here yet.

Continue Reading

Cryptocurrency

Bitcoin price: cryptocurrency scams rort Aussies out of $328 million

Published

on

Bitcoin is booming again, and thousands of Australians are investing in hopes of making a fortune – but that one factor has caused losses of more than $ 328 million.

If you are careful, bitcoin is everywhere. It’s on the news, on TV, and flooded our social feeds.

And why shouldn’t it be? Bitcoin is widely regarded as the king of cryptocurrencies, accounting for about half of the market capitalization of all cryptocurrencies available worldwide.

The fact that few people really understand how Bitcoin works and what drives its value means that it is ripe for scammers and scammers.

In 2020, Bitcoin investment scams caused losses worth a staggering $ 328 million from Australians alone – and they’re just what we know of.

Despite the fact that almost one in five Australians own some type of cryptocurrency, there is no formal regulation of crypto trading in Australia, so it is important to do some research before committing.

“Anyone can accept Bitcoin payments from anyone, anywhere in the world, anytime. This opens up amazing opportunities for investors, but is also fertile ground for scammers, ”says Adrian Prezlozny, CEO of Independent Reserve, one of Australia’s largest cryptocurrency exchanges.

“As with any financial product, it pays to take the time to protect yourself and your investment. The best way to do this is to know what to avoid and who to trust.

“The most important thing is that you are not guaranteed to get rich quick just because Bitcoin is a digital currency. There is no such thing as free money – if the offer sounds too good to be true, it generally is, ”he says.

How to spot a Bitcoin scam

There are many types of cryptocurrency scams – what to look for and what to avoid.

• Ponzi or pyramid schemes: often sounds tempting because they promise you a regular return. You may be told that money is generated through Bitcoin trading activity, but in reality there is no real investment.

• Bitcoin Flipping: Usually involves the claim that if you pay an initial startup fee to exchange bitcoins for money, you’ll double your money overnight. If it sounds too good to be true, it is.

• Offshore Broker / Investment Sites: Cryptocurrency is a volatile asset. Companies that promise big returns on a small, low risk deposit are lying. As simple as that.

• Large Account Unlock: After an initial investment, scam sites can show you a large amount of credit that they have accrued by “investing” or “trading” your deposit. They will then give you reasons to deposit more money before they can “release” your money.

• Anydesk: A broker or consultant who asks you to install screen sharing software, particularly Any Desk, is almost certainly a scam. It doesn’t require a real company to see your desktop screen. It’s usually a trick to get your account information.

• Blockchain Scam: Do not trust anyone who claims to have “found” a large amount of cryptocurrency that is yours on the blockchain. They usually charge a “release fee” to withdraw your funds, but you can guarantee they will walk away with your money.

• Recovery Services: Cryptocurrency transfers cannot be reversed. Any recovery service that asks for money upfront is almost certainly a scam and should be avoided.

Protect yourself and your investment

“The best way to protect yourself and your investment is to choose an established online trading platform that you can trust,” says Adrian.

“A reputable exchange should be able to easily answer your questions about managing your trades and storing your bitcoins. It’s important to ask about things like security, data integrity, cold storage, fees, consumer protection, and available coins.

“A crypto exchange with a solid track record that many customers trust and that has the right checks and balances is your safest bet,” he says.

Continue Reading

Cryptocurrency

Economics Professor Warns ‘Cryptocurrencies May Contribute to Monetary and Financial Instability’ – Economics Bitcoin News

Published

on

Cornell University economics professor and former head of the IMF’s China division, Eswar Prasad, warned that “cryptocurrencies can contribute to monetary and financial instability.” He added that if the industry is not regulated and there is no investor protection, then the risk is compounded.

Economist sees crypto as a risk to financial stability

Eswar Prasad, Nandlal P. Tolani Senior Professor of Trade Policy and Professor of Economics at the Charles H. Dyson School of Applied Economics and Management at Cornell University, shared his opinion on cryptocurrency in an interview with CNBC published on Wednesday.

Prasad is also a Senior Fellow at the Brookings Institution, where he holds the New Century Chair in International Economics, and a research fellow at the National Bureau of Economic Research. Previously, he was Head of Financial Studies in the Research Division of the International Monetary Fund (IMF) and Head of the China Division of the IMF.

He said:

Cryptocurrencies can contribute to monetary and financial instability, especially if they spawned a large and unregulated financial system that lacks investor protection.

His statement echoes a report recently released by the IMF warning that the rising popularity of cryptocurrency could pose a threat to financial stability. In addition, Bank of England Deputy Governor Jon Cunliffe said this week that regulation is urgently needed as the crypto industry is growing rapidly and there are some “very good reasons” to believe it poses risks to the country’s finances could represent stability in the future, even if the risks are currently limited.

Professor Prasad was also asked how cryptocurrencies could increase economic inequality. “Cryptocurrencies and their underlying technology promise to democratize finance by making digital payments and other financial products and services easily accessible to the masses,” he replied. “But with existing inequalities in digital access and financial literacy, they could end up worsening the inequality.”

In addition, he emphasized that “all financial risks resulting from investing in cryptocurrencies and related products could ultimately fall particularly heavily on naive private investors”.

The Cornell Professor of Economics also discussed central bank digital currencies (CBDCs), stating:

I think central bank digital currencies are the way of the future. But every central bank will want to make sure that their money is not used for illegal purposes so that transactions are verifiable and traceable.

However, Prasad noted that “if every payment you make, even for a cup of coffee or a sandwich, can be viewed by a government agency, it is an uncomfortable proposition.” The economist concluded, “In a more dystopian world, you could Let the government decide what kind of goods and services their money can be used for. “

Do you agree with the economics professor? Let us know in the comment section below.

Photo credit: Shutterstock, Pixabay, Wiki Commons

Disclaimer of liability: This article is for informational purposes only. It is not a direct offer or solicitation to make an offer to buy or sell, or a recommendation or endorsement of any product, service, or company. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author are directly or indirectly responsible for any damage or loss caused or allegedly caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Continue Reading
Advertisement

Trending