Australian Tax Office Tells Crypto Traders to Declare Gains

The Australian Tax Office (ATO) has recently reissued a warning in which it tells Australia’s cryptocurrency traders they have to declare their crypto trading gains when reporting annual revenues.

According to Lifehacker Liz Russell, a senior tax agent at Etax.com.au, said it’s important for traders to understand the ATO sees cryptocurrencies as property and not currencies. This means gains made from selling crypto are to be included as capital gains tax, which also applies to real estate and shares.

The ATO has also clarified that if a cryptocurrency is held for over a year, then the Australian taxpayer who holds it may get a discount of 50% on the capital gains tax. Russell added:

Let’s say you originally bought AUD 5,000 worth of XEM. If you later traded it for fiat currency of AUD 8,500, then the AUD 3,500 in profit is considered a capital gain, and you’ll need to add it to your assessable income for the financial year – much like you would any gains you make the sale of shares or an investment property.

Per Russell, the ATO is reportedly “doubling down with its data-matching technology” to make sure cryptocurrency traders pay taxes related to their gains, but exempts crypto assets worth less than AUD $10,000 as these are considered an asset for enjoyment or personal use.

Declaring Losses

This year the cryptocurrency market saw a significant decline, with BTC, the flagship cryptocurrency, going form a near $20,000 all-time high to a $3,200 low before starting to recover.

As such, Russell noted some may end up having to declare losses, which may help them reduce tax liability. The tax agent was quoted as saying:

For example if you made a $3,000 loss on the sale of cryptocurrency but a $4,000 gain on the sale of shares, your net capital gain would be the $4,000 gain minus the $3,000 loss, equalling a $1,000 capital gain.

ATO To Enforce KYC While Eyeing Crypto-Trading Gains

Reportedly, the ATO is also making it mandatory for cryptocurrency exchanges operating in Australia to verify the identity of its customers, and to report suspicious transactions that go over the AUD $10,000 limit.

Per Lifehacker’s report, an ATO spokesperson was quoted as saying:

While there is no specific label on the capital gains schedule or income tax return to identify how many people have invested in cryptocurrency we are still looking at lodgement activity this year to determine any significant impact of cryptocurrencies.

The spokesperson added, however, that through its advice and community channel areas it has received an “increase in questions relating to tax obligations of cryptocurrency activity.” Per the spokesperson, the tax agency sees this as a “positive in people wanting to do the right thing in meeting their obligations.”

OneCoin Denies Being a ‘Hybrid Ponzi-Pyramid Scheme’

The controversial OneCoin organization has recently responded to the Central Bank of Samoa, claiming it isn’t a “hybrid ponzi-pyramid scheme” as it doesn’t fir the definition of these schemes, and that it is a centralized, closed cryptocurrency.

According to the Samoa Observer, the Central Bank of Samoa claimed OneCoin is a “hybrid ponzi-pyramid scheme” that “laundered money through New Zealand to Samoa.” It also claimed the organization was targeting local residents through churches.

The organization, widely believed to be running a pyramid scheme using the cryptocurrency space, sent a statement to the Observer defending itself, claiming it’s neither a pyramid nor a Ponzi scheme. It’s worth noting individuals associated with OneCoin have been arrested and charged in various countries, including China and India.

In its response, OneCoin argued that Ponzi schemes see the revenue of old investors be “generated through the investment of new investors,” and that it doesn’t require its agents, known as Independent Marketing Associates (IMAs), to recruit others in order to earn bonuses.

Its defense revolves around IMAs not being “obliged to incur any additional expenses or recruit a new IMA,” and that they are rewarded for the “value of [their] sales,” not for recruiting new agents.

The organization added pyramid scheme regulations are these for “consumer protection,” and that its IMAs aren’t consumers. This, as when they join the organization they sign a contract classifying them as “self-employed business owners.”

The users which are part of the OneLife Network are NOT consumers. They are IMAs, meaning they are self-employed business owners.

As CoinDesk notes, OneCoin argues it isn’t a pyramid scheme because its agents aren’t seen as consumers and, as such, it can’t be classified under a dictionary definition of a pyramid scheme, and doesn’t force its IMAs to recruit new agents, although they’re incentivized to do so.

OneCoin, instead, argue it is a “centralized, closed cryptocurrency” with strict anti-money laundering (AML) and know-your-customer (KYC) rules, which make it “much more compliant than decentralized [cryptocurrencies].”

As reported, OneCoin’s leaders Ruja Ignatova and Konstantin Ignatov were recently indicted by the U.S. Attorney for the Southern District of New York (SDNY) on charges of wire fraud, securities fraud, and money laundering. Konstantin was arrested in March of this year.

Moreover, earlier this month former OneCoin investor Christine Grablis filed a lawsuit against the organization’s promoters, with Grablis’ attorney claiming OneCoin’s founders created a multi-billion dollar ‘cryptocurrency’ company based completely on lies and deceit.”