What Happens If I Don't Report Crypto On Taxes in Australia?

The ATO is clear that crypto is taxable and that failure to report crypto is tax evasion or fraud. So what happens if you don't report your crypto to the ATO? In this article, we’re covering everything you need to know about the ATO and tax evasion in Australia, and how to make a voluntary declaration.

Will I get punished for crypto tax evasion?

Yes. The ATO is clear that failure to report gains or income from crypto investments is tax evasion or fraud, depending on the offence. If you're caught evading tax on your crypto by the ATO, the penalties are steep. Depending on the severity of your offense and the intent behind it, crypto tax evaders face anything from a slap on the wrist to imprisonment.

Read next: Can the ATO Track Crypto?

ATO tax evasion

According to the ATO, there are two different kinds of crimes when it comes to taxes:

1. Tax fraud

2. Tax evasion

Tax fraud refers to making a false representation of your tax liability. A representation is fraudulent if you made it knowing it was false or made it with no real belief that it was true.

Meanwhile, tax evasion refers to behaviour that results in an avoidance or shortfall of tax - this could be things like omitting income or wrongly claiming a deduction with no credible explanation. Even if an omission is unintentional, it may still result in a verdict of evasion.

So, what are the penalties if you’re an Australian crypto investor who is found guilty of tax fraud or tax evasion?

What are the penalties for tax evasion in Australia?

Penalties depend on the offence, ranging from a fine to imprisonment.

Federal tax offences are legislated under the Criminal Code Act 1995. The most serious tax fraud crimes carry a maximum penalty of up to 10 years imprisonment.

Of course, this is the worst-case scenario. At the ATO’s discretion, they may decide your case is not serious enough for federal court and instead may impose an administrative penalty (a fine). This is often the case for offences like making a false statement on your tax return or failing to lodge your tax return by the deadline.

Administrative penalties in Australia have a simple formula for calculation; one penalty unit is $330. The amount of penalty units you receive is calculated using a statutory formula based on your behaviour and the amount of tax avoided. In general, the more intent you had to evade tax and the more tax you evaded, the higher the penalty. The maximum penalty for tax evasion is 200 penalty units and two years in prison.

What if I’ve previously avoided crypto taxes?

Didn’t know you needed to pay tax on crypto, and now panicking? Whether you intentionally or unintentionally avoided crypto tax, the ATO has what's known as a voluntary disclosure. You can use a voluntary disclosure to inform the ATO of a mistake or inaccuracy left out of a lodgment, as well as any false or misleading information. A voluntary disclosure gives you the chance to correct your tax affairs without penalty.

This isn't to say you won't get an administrative penalty. But in general, those who make a voluntary disclosure can expect a reduction in the penalties or interest charges they'd receive.

The ATO often invites taxpayers to submit a voluntary disclosure prior to an audit. If you make one before the date advised, penalties are usually reduced by up to 80%.

What's the ATO crypto tax evasion message?

There's an ongoing scam where fraudsters are pretending to be from the ATO and telling taxpayers they are suspected of being involved in crypto tax evasion. These scammers ask victims to connect their wallets and provide more details via a link. If you receive this message (via SMS or email), do not click on the link. The real ATO will never ask you to log in to their services via an SMS or email link.

You can keep up to date on other scams with the ATO's scam alert service.

How Koinly can help with crypto taxes

We get it, crypto tax is a headache.

Calculating, reporting, and filing all present their challenges, especially if you’re using a multitude of exchanges, wallets, and blockchains.

But with Koinly, it’s easy. Not only do we keep you up to date with the latest ATO crypto tax guidance, but we can also help you calculate and report your crypto taxes to the ATO in no time at all. Better still, we even keep historical records of your crypto transactions should the ATO ever audit you.