ATO issues warning over crypto hack used to increase tax return: tax return


Taxman issues warning over a crypto trick Aussies are using to increase their tax returns

  • The Australian Tax Office has warned Australians not to use ‘asset wash sales’ 
  • It described the technique as ‘tax avoidance’ and said it would crack down  
  • The ATO warned that it is able to identify and track wash sales from Aussies 

The tax office has warned Aussies not to use a crypto trick to increase their tax returns. 

The ATO says ‘asset wash sales’ are a form of tax avoidance and they will be cracking down on them this year. 

Wash sales describe the disposal of assets like crypto or shares before the end of the financial year before buying them back afterwards. 

This could then lead to a higher tax return than entitled to.

‘A wash sale is different from normal buying and selling of assets because it is undertaken for the artificial purpose of generating a tax benefit for the current financial year,’ the ATO explained.

‘The taxpayer disposes of and reacquires the asset for the deliberate purpose of realising a capital gains loss and obtaining an unfair tax benefit.’

The ATO has warned Aussies to not use a crypo hack in an attempt to increase their tax returns

The ATO has warned Aussies to not use a crypo hack in an attempt to increase their tax returns

The ATO warned it is able to identify and track wash sales by analysing data from registries and crypto exchanges. 

It said it would cancel the sale, something that could lead to an even bigger loss for the taxpayer and no eventual tax return. 

‘Don’t hang yourself out to dry by engaging in a wash sale,’ Assistant Commissioner Tim Loh said. ‘We want you to count your losses, not have them removed by the ATO.’

The ATO also warned that taxpayers who engage in wash sales could face more tax and penalties. 

It is also encouraging Aussies to ignore wash sales advice on social media.  

‘If something seems too good to be true, it probably is,’ the ATO added.

The ATO is also reminding tax advisors who may be promoting wash sales or other tax avoidance activities that they may face action from the Tax Practitioners Board.

‘Most tax advisors do the right thing, but a small number encourage this behaviour. Promoting a tax avoidance scheme will have serious consequences for the tax advisor and could leave their client with a large tax bill,’ Mr Loh said.

The ATO said anyone who is suspecting a person, business or tax adviser to be participating in asset wash sales or other tax avoidance to report them.

Wash sales describe the disposal of assets like crypto or shares before the end of the financial year before buying them back afterwards

Wash sales describe the disposal of assets like crypto or shares before the end of the financial year before buying them back afterwards

On Monday, it was revealed that professionals who drive for work could find themselves in trouble with the tax office – or at least made to answer some tricky questions as petrol prices hit record highs.

Mr Loh said that with more people working from home, his officials would be cracking down on those who still claimed car expenses.

‘What we are seeing is people continuing to claim car and travel expenses at pre-pandemic levels,’ he told the ABC.

‘We do expect car and travel expenses to go down quite significantly because if you’ve been working from home, you can’t be at two places at once.’

Travel to and from work cannot be claimed as a tax deduction but petrol costs for trips to a job-related task can be submitted.

Should they be audited, individuals will have to prove to tax officials that they used their car for work, and not just to buy groceries or do personal errands.

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