Australian tax office says it can trace Bitcoin and cryptocurrency transactions

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The tax office has issued a stern warning to Australia’s 600,000 cryptocurrency investors who think their Bitcoin wealth is untraceable.

Bitcoin on Wednesday climbed above $69,000 for the first time since May.

With the cryptocurrency back in vogue Tim Loh, an assistant commissioner with the  Australian Taxation Office, issued a warning to those hoping to hide their wealth.

‘The ATO matches cryptocurrency to individuals’ tax returns helping us ensure investors are paying the right amount of tax,’ he said.

‘We estimate that over 600,000 taxpayers have invested in crypto assets in recent years.’

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The tax office has issued a stern warning to Australia's 600,000 cryptocurrency investors who think their Bitcoin wealth is untraceable. Bitcoin on Wednesday climbed above $69,000 for the first time since May (pictured is a stock image)

The tax office has issued a stern warning to Australia’s 600,000 cryptocurrency investors who think their Bitcoin wealth is untraceable. Bitcoin on Wednesday climbed above $69,000 for the first time since May (pictured is a stock image)

Like share investors, those who buy and sell cryptocurrency have to pay a capital gains tax if they make a profit and this must be declared on a tax return.

Cryptocurrencies, like shares, are also increasingly being bought over exchange platforms that provide data to the tax office.

But peer-to-peer trades between individuals are harder to track unless the tax office obtains records from phone companies.

Bitcoin has had a volatile year, climbing above $80,000 in March when billionaire Tesla chief Elon Musk announced he had bought $US1.5billion of the world’s most valuable cryptocurrency and would accept it as payment for his electric cars.

It then dived to $45,000 by May after he changed his mind on the grounds mining cryptocurrencies with complex mathematical formulas used too many fossil fuels. 

In early August Fred Schebesta, the millionaire co-founder of the Finder comparison website, was predicting Bitcoin would reach $61,000 by the end of 2021.

But with Bitcoin on Thursday worth $67,000 Mr Schebesta, a cryptocurrency investor, updated his forecast to have the cryptocurrency hitting $87,000 by Christmas, and still reaching $338,000 by 2025. 

‘Bitcoin going up in value is great. But what’s better is when Bitcoin goes up in value slowly because it shows strength,’ he told Daily Mail Australia.

With the cryptocurrency back in vogue Tim Loh, an assistant commissioner with the Australian Taxation Office, issued a warning to those hoping to hide their wealth

With the cryptocurrency back in vogue Tim Loh, an assistant commissioner with the Australian Taxation Office, issued a warning to those hoping to hide their wealth

‘When it goes up too fast it means it’s going to potentially come crashing back. 

‘Whereas this run up has been really nice and slow and considered. 

‘This shows extreme strength, for me, and I think this will create a real strong base for Bitcoin to go much much, much higher.’

Mr Schebesta said other cryptocurrencies like Ethereum, used for business transactions, were now pulling up Bitcoin as bargain hunters looked for alternatives before coming back to Bitcoin.

‘When Etherium ran up, it pulled Bitcoin up for the first time, which I think is a really interesting new pattern where other coins can also pull Bitcoin up where in the past, Bitcoin was the one that pulled everything else up,’ he said.

In early August Fred Schebesta, the millionaire co-founder of the Finder comparison website, was predicting Bitcoin would reach $61,000 by the end of 2021.

In early August Fred Schebesta, the millionaire co-founder of the Finder comparison website, was predicting Bitcoin would reach $61,000 by the end of 2021.

‘Think of the stock market. If the two biggest stocks suddenly go up, then everyone looks at the other stocks and thinks they now look pretty cheap relative to them.

‘So everyone buys the other stocks as well. So that’s what started happening, the second biggest stock started really rallying, and then the first one looked cheap.’

Ethereum on Thursday was worth $4,300, still a fraction of Bitcoin’s $67,000. 

Australians have until October 31 to lodge their tax return if they are doing it themselves or have until May 15 next year if they are going through a tax accountant. 

Those working from home can claim a flat 80 cents an hour rate on their tax return for the last financial year, ending on June 30, or use the lower 52-cent rate and manually add up their phone, internet and electricity expenses. 

Mr Loh said the tax office was this year targeting cryptocurrency investors and those who overclaimed on their work-from-home expenses. 

‘This year, we’re focused on work-related expenses including working from home, income and deductions for rental properties and capital gains tax on cryptocurrency, shares and property,’ he said.

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