ATO Question Cryptocurrency in 2018 Financial Year

funnysht on 04/03/2020 - 13:19
Last edited 04/03/2020 - 13:21

Hey guys,

Received an email from the ATO:
Information provided to us indicates you may have disposed of cryptocurrency in the 2018 financial year. If you exchanged cryptocurrency for goods, cash or other cryptocurrencies then this is normally considered a disposal for the purposes of capital gains tax. You may need to include a capital gain or loss in your income tax return.

When they refer to 2018 financial year: Does this mean from July 2018 till June 2019?

If so, i just had balance of $50, hadn't made any transactions (sell or buy etc) maybe it went up by $10 but hadn't 'exchanged' the cryptocurrency.

So do they just send this email to anyone who has a cryptocurrency balance who hadn't declared cryptocurrency on their return?

Otherwise if they men 2018 fiancial year from July 2017 till june 2018? Then yes

Financial Cryptocurrency

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Comments

  • The mikky on 04/03/2020 - 13:23
    +4

    Firstly double check who you got the email from, it should be coming through your myGov account.

    A red flag is that they only said 2018, the tax office would use the 2017/2018 fin year or 2018/2019 fin year. As in they would make it obvious.

    Seems suspect to me.

    • funnysht on 04/03/2020 - 13:24

      looks quite original but thanks' ill check

      the contact numbers etc are real and from "[email protected]"

      • Cheaplikethebird on 04/03/2020 - 14:32
        +4

        Log into your MyGov account. If it was indeed sent from the ATO then it will appear on the homepage with all other communications sent to you.

    • Typical16-bitEnjoyer on 04/03/2020 - 14:21
      +1

      If you didn't login to myGov to read the message, then it's likely a scam.

      • sabracad on 05/03/2020 - 20:52
        -1

        If it isn't trying to get you to provide personal information it is more likely legit. The ATO regularly send targeted fishing (not phishing) emails and SMS to encourage disclosure.

  • jimbobaus on 04/03/2020 - 13:23
    +4

    Financial year 2018 ended June 30 2018

    • funnysht on 04/03/2020 - 13:26

      i see thanks

      on looking may have made a mistake of few hundred - i lodged it through a tax agent..can i just change it myself online or need to go through the tax agent/

      • jimbobaus on 04/03/2020 - 13:27

        you can do an adjustment through my.gov if needed or call their helpline for more info on how to adjust it

        • funnysht on 04/03/2020 - 13:32

          oh good

          looking back at the report they created they listed cryptocurrency as "Bitcoin Inocme" under other income. so mis spelt …wonder if they just filed it under the wrong section.. or it could be the few hundred i miscalculated -__-

          • MITM on 04/03/2020 - 14:52

            @funnysht: They can't spell Income ? makes me wonder if they can add !

            • funnysht on 04/03/2020 - 14:55

              @MITM: Yeah worrying misspell income as an accountant

  • indium on 04/03/2020 - 13:24
    +2

    They are referring to July 2017- June 2018

  • dust on 04/03/2020 - 13:34
    +1

    Interesting. I wonder where they got the "information" from. Do they Australian exchanges share data with the ATO?

    • funnysht on 04/03/2020 - 13:35

      i use cryptocurrency via coinspot.com.au

      so i'm pretty sure they have to send it to the ATO

    • OpenHand on 04/03/2020 - 14:22
      +5

      All Australian exchanges and a number of international ones share data on all Australian users with the ATO and Austrac.

      In order to operate in Australia they need to register with Austrac - this came into place a year or two ago and covers historical transactions to my knowledge as well.

      • Zachary on 05/03/2020 - 21:53

        That's ironically not anonymous if they have your details….

  • funnysht on 04/03/2020 - 14:15

    Does anyone know if cryptocurrency submitted under "Other income" or under "Capital gains" when filing for ATO? - my accountant filed it under other income

    • bobbieb on 04/03/2020 - 14:19
      +2

      Capital gains. The same way you'd report profit from trading shares or other foreign currencies.

      EDIT: Adding more detail directly from the ATO website:

      Transacting with cryptocurrency

      A CGT event occurs when you dispose of your cryptocurrency. A disposal can occur when

      • sell or gift cryptocurrency
      • trade or exchange cryptocurrency (including the disposal of one cryptocurrency for another cryptocurrency)
      • convert cryptocurrency to fiat currency (a currency established by government regulation or law ), such as Australian dollars, or
      • use cryptocurrency to obtain goods or services.

      If you make a capital gain on the disposal of cryptocurrency, some or all of the gain may be taxed. Certain capital gains or losses from disposing of a cryptocurrency that is a personal use asset are disregarded.

      If the disposal is part of a business you carry on, the profits you make on disposal will be assessable as ordinary income and not as a capital gain.

      While a digital wallet can contain different types of cryptocurrencies, each cryptocurrency is a separate CGT asset.

  • bobbieb on 04/03/2020 - 14:18

    Sounds fake… definitely check the origin. Did you get a corresponding MyGov ATO message? Is the anything on your tax file if you log into the ATO website?

    If you exchanged cryptocurrency for goods, cash or other cryptocurrencies then this is normally considered a disposal for the purposes of capital gains tax. You may need to include a capital gain or loss in your income tax return.

    IANAL, or accountant, but my understanding is that if you use cryptocurrency to buy goods - in the same way you'd exchange AUD on a vacation, then use it by buy goods & services, then that's not a capital gains event.

    Then again, if you've been using coinspot to trade for investment/speculation purposes, then all the aussie exchanges fell into line with the ATO and AUSTRAC a year or so back, so yeah you probably should be tracking any profit/losses for tax purposes.

    • OpenHand on 04/03/2020 - 14:24
      +2

      They've put in a very narrow interpretation of the exchange for goods rule. It essentially only covers very short term exchanges - e.g. buying Bitcoin and then using that Bitcoin within 24 hours to pay for something else. There are few situations where this applies, such as if a concert was only selling tickets via crypto payments.

      Holding bitcoin long term and paying for things with it counts as CGT disposal.

      • bobbieb on 04/03/2020 - 14:32

        That's interesting. Have they published anything to that effect?

        The original ruling and ATO website is still wonderfully vague.

        Certain capital gains or losses from disposing of a cryptocurrency that is a personal use asset are disregarded.

        I took that and deliberately kept my real trading and play money (for buying stuff) through two separate exchanges, etc.

        • OpenHand on 04/03/2020 - 15:22
          +1

          I think there were several guidances outlined on the ATO forum that are basically to that effect; I don't have links to the exact topics sorry.

          Spending crypto on things is probably harder to track than, say, trading on an exchange so for small amounts it may not make a world of difference or get you in trouble. But I always recommend staying on the safe and compliant side.

          I believe it's because they treat crypto as a CG asset instead of currency, so allowing you to buy things with it to dispose of it opens loads of loopholes, as you have a way of getting rid of it without paying CGT, as opposed to selling for currency / trading for assets where you do pay CGT.

          You can probably find something on that topic by searching for 'Living Room of Satoshi' ATO rulings, as you can pay your bills via crypto with that service and that was an area of confusion for sure.

          • bobbieb on 04/03/2020 - 15:45

            @OpenHand: Cool, thanks.

            I revisited a lot of the old pages that they originally put up, and I can't see that they've tidied up any of the vague stuff since I last looked.

            The closest that I could find seems to still be (my emphasis):

            Cryptocurrency is not a personal use asset if it is acquired, kept or used as an investment, in a profit-making scheme, or in the course of carrying on a business. It’s also worth keeping in mind that the longer you hold your cryptocurrency, the less likely it is that it will be a personal use asset.

            I'm not exactly buying and selling big ticket items, so I can't see my play money account triggering any ATO raids. :)

    • funnysht on 04/03/2020 - 14:50

      no it's real

      because the email address they sent it from is on the ATO website as legitmate

      • bobbieb on 04/03/2020 - 14:58
        +1

        Weird… this seems outside the the ATO's usual method of communicating stuff relating to accounts.

        ATO emails are mostly limited to "Tax time is coming" kinda spam, "real" correspondence would generally be sent MyGov message.

        If it's indeed legit, I'm sure that mine will be arriving soon. :)

        • funnysht on 04/03/2020 - 14:59

          yeah i checked mygov. inbox no such message. but this email looks legit and it looks like an error on my accountant's part anyway.

      • theguyrules on 04/03/2020 - 15:01
        +6

        People can spoof email addresses

  • goodap on 04/03/2020 - 14:23

    Same email received at 13:37

    • Tony Strong on 09/03/2020 - 11:16

      what do you do? worked out your CGT already? It seems mission impossible for me with more tha 1500 transactions.

  • Seraphin7 on 04/03/2020 - 14:49

    When they refer to 2018 financial year: Does this mean from July 2018 till June 2019?

    That's year ended 30 June 2018.

    In general terms, the ATO are looking for crypto (and other trading) income in increasingly sophisticated ways. The short form of this is that you need to ensure that your crypto trading gains (and losses) are included in your tax return.

    To answer your specific question, if you sold or in other way disposed of any crypto in the year 1 July 2017 to 30 June 2018, the net proceeds of that sale (i.e. gain or loss) need to be included in that year's income.

    As usual, speak to your accountant for more detail and to ensure you are treating this 100% correctly.

    • funnysht on 04/03/2020 - 14:52

      Yes i just spoke to them.

      They seem to agree with me (which is worrying lol

      Anyway it seems they placed it under "other income" and NOT under "CGT—? so probably the reason why ato got confused

      For me it should be CGT- i used it as an investment purpose

      • MITM on 04/03/2020 - 15:01

        Seems you're getting better advice for OB.
        Will your accountant pay the fine if they were wrong ?

        • funnysht on 04/03/2020 - 15:02

          the email just says if i fix the error before april 2020 there will be no fine..

          • funnysht on 04/03/2020 - 15:03

            @funnysht: We're giving you the chance to fix any mistakes now. If we audit you and find you haven't reported your capital gain or loss correctly, we may charge you a penalty.

            What you need to do

            Check your records to work out if you need to report a capital gain or loss.
            If you've made a mistake, you need to amend your income tax return by 01 April 2020 to avoid a penalty.

            • MITM on 04/03/2020 - 15:13
              +2

              @funnysht: If you made a profit, and paid tax - you'd still be ahead.
              If it's taxed under "other income" then that is at your marginal tax rate.
              Whereas if it's a CGT event and declared as a capital gain - you get a 50% offset so in effect pay 1/2 at your marginal tax rate - so the ATO might have done you a favour - not so your accountant. (Not professional advice but my opinion only)

              • OpenHand on 04/03/2020 - 15:25

                @MITM: The 50% offset is only if he held the CGT assets for at least 12 months before selling.

                Selling / trading crypto is always treated as a CGT event by the ATO. That includes trading crypto for crypto (record the buy price of the asset when you bought it, record the sale price of your crypto when you sell it, record the value of the crypto you bought, record the fees that are part of the transaction).

        • Seraphin7 on 04/03/2020 - 15:35

          Yes, let me revisit my statement … As usual, speak to your accountant a competent accountant for more detail and to ensure you are treating this 100% correctly.

      • Tony Strong on 04/03/2020 - 15:27

        Received the same email an hour ago. Did you ask them the exact period of financial year 2018?

  • jimdotpud on 04/03/2020 - 15:23

    remember to claim any applicable CGT discount if you held the asset for more than 12 months.
    strange that your tax agent would put that under "other income". "income" from disposal of an asset isn't the same as dividends. maybe look for a new tax agent in future.

  • bobbieb on 04/03/2020 - 19:21

    Interesting… I just received a different, less specific version of the email. No mention of which financial year, so it seems that I may not have rated as highly on the list as the OP. Or they could just be fishing… :)

    If you exchanged cryptocurrency for goods, cash or other cryptocurrencies then this is normally considered a disposal for the purposes of capital gains tax. If you have disposed of your cryptocurrency you may need to report a capital gain or loss in your income tax return.

    What you need to do

    When you dispose of cryptocurrency you should review your records to work out if you need to report a capital gain or loss.

    If you've made a mistake by not reporting the disposal of cryptocurrency you should correct your return as soon as possible. Visit our website at https://ato.gov.au/amendareturn for information.

    You can lodge or amend your tax return by:
    * using our online services through myGov
    * asking your registered tax agent to make the changes for you.

    If your income tax return is correct, you don't need to do anything. We'll contact you if we need more information.

    • Tony Strong on 09/03/2020 - 11:17

      what do you do? worked out your CGT already? Any SIC to pay? It seems mission impossible for me with more tha 1500 transactions.

      • bobbieb on 10/03/2020 - 05:50

        I use btcmarkets for my real trading. Thankfully, they have a canned tax statement report that you can run that seems ok.

        Yeah, I can imagine that trying to account for 1500 trades by hand would be an interesting challenge. It may be time to get a decent tax accountant.

        • Tony Strong on 10/03/2020 - 12:20

          asked a few accountant, most have no idea the rules, two quoted me a few thousand bucks as a start…..

  • Kozhutki on 04/03/2020 - 19:23
    +1

    I received the same email today. I invested $2000 in 2017 and sold for $9700 and their calculation on the amendment form stated I would owe them around $2400… This seems ridiculous on a $7700 gain…

    I would understand if this was a business investment but it was personal so the supposed debt seems to be way too high.

    • SBOB on 04/03/2020 - 19:31
      +4

      its capital gains

      CGT operates by treating net capital gains as taxable income in the tax year in which an asset is sold or otherwise disposed of. If an asset is held for at least 1 year then any gain is first discounted by 50% for individual taxpayers

      so, if you held for less than 12 mths, standard tax rate for your income bracket
      more than 12mths, half that

      looks like about the standard tax rate for the '$37,001 – $90,000' bracket

      • Kozhutki on 04/03/2020 - 19:37

        Yeah well I had earned around $58000 pre tax that year and paid around 8k tax.

        So basically this is the expected debt amount? Seems totally unfair for such a small sum but that's the law I guess…

        • SBOB on 04/03/2020 - 19:45

          Seems totally unfair for such a small sum but that's the law I guess…

          why should the amount matter?
          you made a gain, and the 'man' wants his cut.. no different than if you had bought shares etc
          conversely, if you'd made a loss you could claim the capital gains loss
          (thanks ATO, you're making my crypto losses slightly more tolerable due to that)

          • Kozhutki on 04/03/2020 - 19:58

            @SBOB: No you're completely right. I just can't grasp the amount owing, I mean it's obviously relative. If I earned that amount total including my yearly income that would've been the tax anyway.

            I blame myself for not educating myself further in the tax implications for investing "fun" money. I'm more upset that it's taken them 2 years to contact me about my apparent debt, which just feels like they're stealing from me (I know they aren't, it just feels that way at the moment) I realise it's my fault either way.

            Rant over

  • kevinn83 on 04/03/2020 - 23:08

    any tax agents in melbourne who are specialise in crypto tax?

    • Tony Strong on 09/03/2020 - 11:21

      did you also receive this email? find a good way to work out your tax already? It seems mission impossible for me with more than 1500 transactions.And a quote from a local account is a few thousands at least if they do it for me……….

  • OzHunterNSW on 05/03/2020 - 10:11
    -3

    FAKE….. WARNING

    They would not send you an email…..

    Do not reply…

    Do not give any details…. come on…. you hear of this every day on Acurrent Affair

    How would they even know about your crypto

  • RedZed998 on 05/03/2020 - 11:52

    Another aspect to the discussion regarding gifting a CGT item is the matter on the death of the owner of the crypto. Irrespective of the length of time the crypto asset was held (longer or less than 12 months) it could be seen as a form of death duty to the recipient within that financial year.
    Gifts being non taxable as part of a deceased estate, but if the benefactor received a crypto by way of transfer from the estate electronically does he/she add that to their taxable income?
    Just a thought, and not covered by the ATO site.

  • Tony Strong on 09/03/2020 - 11:25

    anyone here can share some tips on how to work out the tax? It seems mission impossible for me with more than 1500 transactions.And a quote from a local account is a few thousands at least if they do it for me………. absolutely driving me crazy now. I lost 30k in coins, and now maybe another 20k to pay tax (coin-to-coin exchange in start of 2018 and then leave all the coins in exchange untouched since then, stupid me), and potential a few more k to pay for working out the tax………..

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