It’s a question every crypto investor has pondered. How much does the ATO know about your crypto activity - and are they tracking every little trade? Can you get away with leaving your crypto gains off your tax return? Through information from banks, cryptocurrency exchanges, and financial institutions, the ATO can track crypto where it interacts with the ‘real world’ to follow the funds back to the taxpayer. Let’s take a look under the hood at how the ATO tracks crypto.
Can the ATO track crypto?
Yes, the ATO tracks crypto. Your data is likely already on file with the ATO if you’ve got an account with an Australian cryptocurrency designated service provider (DSP).
Australia’s tax office has been tracking crypto in earnest since 2019, when it introduced a data-matching program focused on cryptocurrency transactions. The program allows the ATO to access data held by designated service providers, which includes crypto exchanges like Binance, CoinSpot, CoinJar and more. The collected data is used to identify the buyers and sellers of crypto, and to quantify the related transactions.
Next, the ATO compares the data provided by DSPs with its own records in order to identify individuals who are failing to meet their registration, reporting, submitting, and payment obligations.
Are all Australian exchanges reporting to the ATO?
Yes. Since 2018, all businesses providing Digital Currency Exchange (DCE) are required to meet Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) obligations, including:
- Maintain strict KYC policies
- Adopting and maintaining an AML/CTF program to identify, mitigate and manage money laundering and terrorism financing risks.
- Identifying and verifying the identities of their customers.
- Reporting to AUSTRAC suspicious matters, and transactions involving physical currency of $10,000 or more.
- Keeping certain records for seven years.
Which exchanges are AUSTRAC registered?
Exchanges need to be registered with AUSTRAC in order to operate in Australia, and it is a requirement that they share KYC data with the ATO to ensure tax compliance. Registered crypto exchanges include, among many others:
What can the ATO find out?
Designated service providers are bound by law to provide the ATO with requested information. That means the ATO has the ‘know your customer’ (KYC) information you provided when signing up for any Australian exchange or wallet. This includes personal information and transaction data like:
- Phone numbers.
- Bank account details
- Transaction dates
- Asset types
- Transaction values
How far back can the ATO track crypto trades?
The ATO knows who has crypto transaction data from as far back as 2014. Under the data-matching program, the ATO has collected data on cryptocurrency transactions for the 2014-15 to 2019-20 financial years. The ATO has made it clear that they can and do track crypto. They’ve also made it clear that if you’ve sold, traded or earned cryptocurrency you need to report that in your annual income tax return.
28 days to act on ATO letter
Following the data matching exercise crypto investors may be contacted by the ATO and given the opportunity to verify the information collected, before any compliance action is undertaken. The ATO states that people will be given at least 28 days to clarify any information that has been obtained from the data provider.
Where people find that they have made an error or omission in their tax return, they are advised to contact the ATO as soon as possible. Penalties may be significantly reduced in circumstances where the ATO is contacted prior to an audit.
If investors make a mistake, they can request a self-amendment or make a voluntary disclosure, and if they need assistance paying their taxes, they can contact the ATO.
Do you have to declare cryptocurrency in Australia?
Yes, in Australia crypto can be taxed as both capital gains tax and income tax. Fortunately ATO crypto taxes are pretty simple with the right tools. Using an ATO-compliant crypto tax calculator like Koinly can help keep you on the right side of the law.
More questions? We have you covered.
Is Binance registered with AUSTRAC?
Yes. Binance is a registered digital currency exchange (DCE) with AUSTRAC, and Binance Derivatives has an Australian Financial Service licence.
Is Coinbase registered with AUSTRAC?
Yes. Coinbase is a registered digital currency exchange (DCE) with AUSTRAC and a board member of Blockchain Australia.
Is Kraken registered with AUSTRAC?
Yes. Kraken is a registered digital currency exchange (DCE) with AUSTRAC.
Does Binance report to the ATO?
Yes. As a registered DCE, Binance may be required to share data upon request with the ATO.
Does Coinbase report to the ATO?
Yes. As a registered DCE, the ATO may request customer data from Coinbase as part of the ATO data-sharing program.
Does Kraken report to the ATO?
Yes. As a registered DCE, Kraken may be required to report to the ATO as part of the data-sharing program.
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