ATO, Compliance, Crypto Assets, SMSF

ATO monitoring crypto tax reporting

ATO SMSF Annual return Cryptocurrency

The ATO is conducting a data-matching project to ensure SMSFs and investors accurately report cryptocurrency sales in their annual returns.

SMSF trustees should accurately document the sale of digital assets in their fund’s annual return as the ATO is using data from cryptocurrency providers to ensure they are complying with their reporting requirements.

“The ATO has mentioned they are going to acquire data from crypto-designated service providers for the 2023/24 financial year right up until the 2026 financial year and they are going to match it against their own systems to identify clients who fail to report a disposal of crypto-assets in the income tax return,” Institute of Financial Professionals Australia head of superannuation and financial services Natasha Panagis said during a webinar held by the body today.

“If clients are using any entity to invest in crypto, the ATO is on the lookout and is going to be data-matching between those crypto data platforms and their own platforms to make sure that tax is recouped if people are selling their crypto-assets.

“Be aware for clients of yours that might have an SMSF [and have invested in cryptocurrencies] that change is going to happen.”

Panagis noted the ATO took this course of action because no framework exists to regulate the asset class and SMSFs continue to report substantial losses from investing in cryptocurrencies.

“These losses are attributed to a whole range of factors, including scams, theft, collapsed crypto trading platforms, lost passwords and scammers impersonating the ATO,” she said.

“There’s quite a lot of sophisticated scams going on at the moment and the ATO has noted that many crypto-assets are not classified as financial products.

“The platforms that are used for buying and selling crypto are often unregulated, which can leave investors unprotected in the event of platform failures or security breaches that could occur and could result in the loss of digital assets.”

According to the latest ATO quarterly statistics, SMSFs now hold $1.044 billion in cryptocurrencies, falling from a peak of $1.613 billion in the June quarter 2021.

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