Why playing the share market, buying Bitcoin or selling a house could get you in trouble with the tax office – here’s how to make sure you don’t get stung
- Australian Taxation Office cracking down on those who profited from shares
- Tax agent H&R Block said Bitcoin investors were also in their audit sights
- Expert Mark Chapman said tax office had access to cryptocurrency transactions
Australians who have done well on the share market, property or even Bitcoin during the past year face a tax crackdown.
Since bottoming out in March 2020, the benchmark S&P/ASX200 has surged by 46 per cent.
The key Australian Securities Exchange index on Friday was only 2 per cent below the record high of 7,197 points reached on February 20 last year.
In little more than a year, shares in buy now, pay later app Afterpay have have multiplied by 14 times, from a low of $8.80 to $123.14.
Australians who have done well on the share market, property or even Bitcoin during the past year face a tax crackdown. Pictured is the Australian Securities Exchange in Sydney
Penalties for failing to declare money gains
CARELESS: 25 per cent
RECKLESS: 50 per cent
DELIBERATE: 75 per cent
REPEAT OFFENDER: 95 per cent
Source: H&R Block analysis of Australian Taxation Office penalties for failing to declare capital gains
Investors get tax credits on share dividends when a corporation has already paid company tax.
But share market investors have to declare the capital gain from the increase in share prices.
Tax agent H&R Block’s director of tax communications Mark Chapman said Australians faced a 25 per cent penalty for carelessly miscalculating how much they earned from shares, investment properties and now cryptocurrency.
A reckless error in declaring share gains could incur a 50 per cent penalty.
Deliberate tax avoidance could see someone penalised 75 per cent of the difference between their capital gain and what they declared.
Then there’s a much more severe penalty for repeat offenders of 95 per cent where a taxpayer has a ‘previous history’ of lying.
‘Make sure all your capital gains are properly disclosed and that you have all the documentation to support your transactions,’ Mr Chapman told Daily Mail Australia.
The Australian Taxation Office is also cracking down on Bitcoin investors with the price since July surging from just $12,000 to more than $80,000.
The Australian Taxation Office is also cracking down on Bitcoin investors with the price since July surging from just $12,000 to more than $80,000
Data from BTC Markets, a cryptocurrency trading platform, found 12.6 per cent of Australians traded in cryptocurrency compared with 12.1 per cent who traded in gold, silver and fixed-income annuities, based on a survey of 2,000 investors.
Mr Chapman said the tax office had now access to cryptocurrency transactions through designated service providers.
‘Surging prices together with a veneer of confidentiality are driving people into cryptocurrency in unprecedented numbers,’ he said.
‘Too many people who invest in Bitcoin assume that because the transactions are online, with profits and losses denominated initially in their cryptocurrency of choice, the ATO will not know about them and that used to be true. ‘
A surge in Australian property prices is also a ripe picking for the tax office, as investors reap capital gains from selling a house or apartment for a tidy profit. Pictured are Sydney houses
A surge in Australian property prices is also a ripe picking for the tax office, as investors reap capital gains from selling a house or apartment for a tidy profit.
‘If you’re selling a property, make sure you have details of any capital improvements made whilst you have owned it – extensions, alterations,’ Mr Chapman said.
Australian property prices in March surged by 2.8 per cent, the fastest monthly gain since October 1988, CoreLogic data showed.
Between November and March, Sydney’s median house price soared by 11 per cent to a record high of $1.112million.
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