The ATO is constantly improving their data matching abilities. Leaps in technology and big data mean that the 2019 tax year will see the ATO have access to more information than ever before. The ATO is constantly collecting information about you from a variety of sources – while this means efficiencies when it comes to providing information to your accountant, it means that its more important than ever to ensure you are meeting all your tax obligations.
With this tax season comes more focus from the ATO in ensuring that all income and assets are reported accurately, especially cryptocurrency investments and revenue from the sharing economy.
Cryptocurrencies are a big target for the ATO. They have setup a special task force to deal specifically with cryptocurrencies. The ATO is obtaining information from Cryptocurrency exchanges and this means that any capital gains or losses in cryptocurrencies will be heavily scrutinised by the ATO.
Cryptocurrencies are not considered a form of currency, rather, for tax purposes, they are seen as an asset. This means that any gains or losses made on disposal (or exchange) of cryptocurrency will be captured under the tax system. Even if you are switching currencies or cashing out into AUD.
As cryptocurrencies are generally treated as a capital asset, capital gains tax could apply to any gains made from exchanging or disposing of your cryptocurrency. Capital gains tax can be complex but will be something that the ATO will be looking at. This is especially true where taxpayers are claiming large capital losses.
If you are deemed to be ‘actively trading’ cryptocurrencies (vast amount of trading on a daily basis) the activity may be treated as a business net income/loss, meaning it’s not treated as a capital asset.
The main thing to note with Cryptocurrencies is that every transaction is an event which needs to be captured and a gain/loss calculated. This applies when transferring between cryptocurrencies and back to AUD. If you are making even a handful of transactions, the reporting around this can become quite cumbersome. There are some online providers who offer crypto reporting solutions – so if you are making more than a few transactions per year, this may be well worth looking into.
The sharing economy
The sharing economy refers to AirBNB, Uber, Didi, AirTasker, and any other similar services. The ATO is also accessing information from AirBNB and Uber in particular to ensure that taxpayers are not omitting income generated on these platforms.
All income earned from providing these services must be declared in your tax return. But you may also be able to claim deductions on expenses associated with providing the service.
Any deductions you claim must be related to providing the service itself. This could include washing costs for linen in your AirBNB as an example. To find out everything that you can claim you should talk to your accountant. They will have detailed knowledge, helping you get the most out of the sharing economy.
GST requirements for Uber and other ridesharing services
If you are a driver for a ridesharing service, then regardless of income you must register for GST and report at least quarterly via a BAS. This is a special rule for taxi drivers and rideshare drivers. On the other hand, most businesses have the option to not register for GST if their annual turnover is under $75,000 per year.
If you are unsure about what you are required to report in your tax return or what deductions you can claim, talk to your accountant. If you do not have an accountant feel free to give Link Advisors a call.