The Australian Tax Office (ATO) is intensifying its efforts to clamp down on cryptocurrency tax evasion by amassing more than a decade's worth of crypto transaction data. Taxpayers who fail to properly report their crypto gains this tax season could face significant repercussions.

With the end of Australia’s financial year on June 30 fast approaching, the ATO is gearing up to scrutinize those who have realized profits from their cryptocurrency investments. As taxpayers rush to file their returns before the deadline, the ATO’s enhanced surveillance on crypto transactions is set to play a pivotal role.

Adam Saville-Brown, the general manager of crypto tax reporting software Koinly, highlighted the ATO’s persistent focus on cryptocurrency. “The ATO has kept a keen eye on crypto in recent years — and this year is no exception,” he told Cointelegraph. This year, the ATO has significantly expanded its crypto data matching program. According to Michelle Legge, Koinly’s head of tax education, the program now aims to collect data from 2014 to 2026 from all legally operating crypto exchanges in Australia.

“Whether you’re using Binance, Coinbase, CoinSpot, or another exchange, the ATO will be able to collect your data,” Legge explained. This extensive data collection effort is expected to gather a wide array of information, including names, addresses, emails, social media accounts, and IP addresses of approximately 1.2 million crypto investors annually.

While most Australian crypto investors are aware of their tax obligations, Saville-Brown believes the revamped program will identify those few who have not been compliant. Those who fail to accurately report their crypto transactions could receive reminders from the ATO, urging them to correct their filings.

Navigating the Complexities of Celsius Refunds

Adding to the complexities of crypto taxation, the ATO has not yet provided clear guidance on how to handle refunds from bankrupt American crypto lender Celsius. Saville-Brown pointed out that this lack of clarity could leave investors confused about the tax implications of their repayments in Bitcoin (BTC) and Ether (ETH).

Crypto deposits are considered taxable events, potentially resulting in gains depending on the purchase price. However, Legge noted that investors are uncertain about how to calculate these gains or losses. Specifically, there is ambiguity regarding which figures to use as the cost basis — whether it should be the original purchase price of the assets or their value at a specific point in time, such as the date withdrawals were limited or the bankruptcy filing date.

Given these uncertainties, Saville-Brown advised investors to consult experienced accountants to determine their tax liabilities, as the refunds could be classified as either taxable gains or losses.

Bitcoin ETFs and Their Tax Implications

Australia has recently introduced two spot Bitcoin exchange-traded funds (ETFs), marking significant milestones. One of these ETFs holds Bitcoin directly, while the other is listed on the country’s largest stock exchange. Despite these advancements, existing tax laws still apply.

Legge emphasized that investors will incur Capital Gains Tax whenever they sell holdings from a Bitcoin ETF and realize a gain. “While the introduction of Bitcoin ETFs to the Australian stock market is great news for the wider adoption of cryptocurrency, it’ll still result in a tax bill,” she said.

As the ATO ramps up its efforts to ensure compliance, cryptocurrency investors in Australia must navigate an increasingly complex tax landscape. Properly understanding and reporting crypto transactions is more crucial than ever to avoid potential penalties and ensure adherence to tax regulations.