A recent survey conducted by Independent Reserve and PureProfile gathered insights from over 2,100 taxpayers regarding their attitudes towards cryptocurrency, focusing on their awareness, adoption, trust, and confidence. The findings highlight significant gaps in tax compliance among cryptocurrency investors.

Awareness and Adoption:

• The survey indicated varying levels of awareness and adoption among Australian taxpayers, with many still unfamiliar with the tax implications of cryptocurrency transactions.

Trust and Confidence:

• Trust in cryptocurrencies and confidence in managing crypto-related tax obligations were also assessed, revealing a need for better education and resources.

Common Mistakes in Crypto Tax Compliance

Shane Brunette, the founder of the Crypto Tax Calculator tool available through Independent Reserve, emphasized that the most significant error made by crypto investors is failing to maintain accurate and detailed transaction records.

Taxable Events:

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• Brunette pointed out that many cryptocurrency investors are unaware that numerous transactions could be considered taxable events. This includes:
  • Selling cryptocurrency for fiat currency
  • Trading one cryptocurrency for another
  • Using cryptocurrency to purchase goods or services

Record-Keeping:

• Comprehensive records should be kept for all transactions, including dates, amounts, types of assets, and their values at the time of each transaction. This practice is crucial for accurate tax reporting and compliance.

Australian Tax Office (ATO) Regulations

The ATO treats cryptocurrencies as assets subject to capital gains tax (CGT). Key points include:

• Capital Gains Tax: Disposal of cryptocurrency incurs CGT, with a 50% discount available if held for more than a year.
• Income Tax: Income tax liabilities arise when cryptocurrency is paid to a taxpayer or earned through staking, where traders earn interest on cryptocurrencies lent to third parties.

ATO’s Enhanced Surveillance

In April, the ATO announced increased surveillance of traders failing to comply with CGT obligations, including:

• Acquiring records of up to 1 million traders from cryptocurrency exchanges.
• Collecting addresses, birthdays, and transaction details as part of its expanded data-matching initiative.

Objective:

• The aim is to ensure taxpayers correctly meet their taxation and superannuation obligations concerning cryptocurrency transactions and ownership.

Importance of Accurate Reporting

Brunette stressed the importance of recognizing and reporting all taxable events to avoid an incomplete picture of cryptocurrency income. This includes:

• Mining income
• Staking rewards
• Interest earned from cryptocurrency savings accounts

To avoid hefty tax bills and penalties for non-compliance, Brunette advises investors to prioritize tax planning and compliance from the beginning. As the ATO places increased emphasis on cryptocurrency, maintaining detailed records and understanding taxable events are essential steps for investors to ensure compliance and avoid financial pitfalls.

Source: accountantsdaily.com

The post Nearly half of crypto investors unclear on tax rules, survey finds appeared first on HIPTHER Alerts.

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