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1 in 3 crypto owners confused about tax, study reveals

Australian cryptocurrency owners need to be aware of their profits and whether they incur tax, experts have warned.

A recent study by the University of Queensland found that 1.5 million Australian cryptocurrency owners are uncertain whether their digital assets are tax-free.

The Tax Office would pursue all cryptocurrency owners who failed to meet their tax obligations, according to the study.

The study also noted cryptocurrency owners were set to find out the “hard way” that their assets are not tax-free, as the 31 October deadline loomed.

The research consisted of 745 coin holders and found that 66 per cent were aware they would need to pay tax on their cryptocurrencies if sold at a profit.

Eight per cent were unaware they would need to pay tax and a further 25 per cent were unsure.

It was highlighted that 64.5 per cent of the ‘unsure’ group were women.

The study said with an estimated 4.5 million cryptocurrency owners in Australia, 33 per cent would be unclear on tax obligations.

This would equate to 1.5 million coin holders who wouldn’t have budgeted for the required tax payments.

“Australians may not be fully aware of the potential tax consequences and may experience adverse events, which leave them financially vulnerable,” the study said.

“If investors are not aware, they may omit this on their annual tax return and be contacted by the Australian Taxation Office later when discovered.”

Results demonstrated that 49 per cent of ‘unaware’ respondents were tertiary educated, which experts noted as “surprising.”

Following the study, experts warned cryptocurrency owners to conduct due diligence before investing and to educate themselves on potential risks and how to avoid them.

Leading crypto analyst Sydel Sierra said it is vital coin holders understand the rules around cryptocurrency and that ignorance was no excuse.

“The reality is that cryptocurrencies are treated as personal income in Australia rather than a currency, which means when you sell, it will be subject to tax if there’s a capital gain,” Sierra said.

“This might come as a shock or frustrating if you didn’t know the ATO would come knocking, but the plus side is that the taxman only takes a percentage, not the whole lot.”

Taxable crypto amounts relied on personal income and would be treated as part of it, according to Sierra.

“If you’re a high earner in the top bracket, you’ll pay 45 cents to the dollar on your gains – that’s your reward for being independently wealthy.”

“The asterisk to all this is, if you sell your crypto after holding it for longer than a year, you’ll be eligible for a 50 per cent discount, meaning only half of your profits would be taxed.”

Imogen Wilson
28 October 2024
accountantsdaily.com.au

Withholding for foreign residents: an ATO focus area

The ATO is currently focusing on ensuring that taxpayers are aware of their obligations regarding treatment of withholding amounts and amount paid to foreign residents.

If your business or investment structure make payments such as interest, dividends or royalties to any foreign residents, you may be required to withhold tax from these payments.

If these withholding requirements apply to you, you’ll need to lodge a PAYG annual report or an annual investment income report, and withhold and pay the correct amount of tax.

This is important as the withholding tax obligation arises whether you make the payment to the foreign resident, credit their account, or deal with the payment on their behalf or at their direction.

There are a number of exemptions that apply, but this can be technical in operation, so it’s recommended to seek advice specific to your circumstances if you make any payments to non-residents.

The ATO is alert to payers who have not withheld and paid amounts (or have withheld and paid incorrect amounts), incorrectly relied on an exemption or treaty relief, or misclassified deductions for interest or royalty payments to an offshore entity.

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Controversial ‘Airbnb tax’ set to become law

A levy on short-stay accommodation bookings will apply from next year after being passed by the Victorian parliament.

A 7.5 per cent levy on short-stay accommodation platforms such as Airbnb and Stayz will apply in Victoria from next year after the state parliament passed the controversial legislation last week.

The Australian-first Short Stay Levy Bill 2024 passed with 21 votes to 15 and would begin on 1 January 2025.

It was announced last year as part of the state government’s landmark Housing Statement, which detailed a 10-year plan to improve housing affordability and build 800,000 homes.

The levy was expected to raise between $60-70 million a year for the state’s social housing agency Homes Victoria while pressuring landlords to take properties off the short-term accommodation market amid the state’s rental crisis.

“It is important we recognise and give a signal to the market that our priority is to get people into homes and long-term, secure rental accommodation is important,” Treasurer Tim Pallas said.

Under the new law, liability to pay the 7.5 per cent levy accommodation booking fee would be imposed on the provider of a booking platform.

For direct bookings, the owner or renter would be responsible for paying.

It would be charged on all stays under 28 days in premises in Victoria that were classed as short-term accommodation with exclusions for primary residences, commercial residential premises and specialised housing facilities.

The Victorian Liberal opposition slammed the tax as unfair and pledged to repeal it if it won the 2026 state election.

Opposition leader John Pesutto said: “This tax isn’t about getting more homes built and will only add to growing cost-of-living pressures under Labor.”

“Regional businesses and Victorians simply hoping to enjoy a weekend away shouldn’t be the ones to pay for Labor’s financial mismanagement and a future government I lead will scrap this tax.”

Shadow treasurer Brad Rowswell said the government was penalising holidaymakers during a cost-of-living crisis.

“Labor’s holiday and tourism tax is an unfair tax from a government that cannot manage money and is desperate to fill its budget black hole,” he said.

“Premier Jacinta Allan simply does not understand the cost pressures that Victorians are under at the moment.”

When the levy was announced last year, tax experts also told Accountants Daily that while the impost could make operating short-term rentals more expensive for landlords, it would not necessarily lead to marked increases in the rental market.

Matthew Richardson, a property tax adviser from Cooke & Foley, said the levy might discourage new entrants but existing investors might “outride the downturn”.

“This levy makes the purchase of short-stay accommodation properties less attractive,” he said. “As a result of the levy, the yield received by the property owner is reduced immediately and other costs such as interest rates are not being lowered for the investor to offset the levy.”

“Because this levy is only on short-term accommodation, it's making longer-term rentals seem slightly more appealing … but at the same time, most investors are in it for the longer term. So, they'll outride that downturn.”

Christine Chen
21 October 2024
accountantsdaily.com.au

Super guarantee a focus area for ATO business debt collection

The ATO has recently confirmed some key focus areas of business debt collection – including debts relating to superannuation guarantee (SG), pay as you go (PAYG) withholding and GST.

This is a timely reminder for all businesses to ensure they are meeting their obligations.

For SG contributions for your employees and eligible contractors, these payments must be made on time and to the correct funds (and some awards may require more than quarterly payments).

It is important to note that a contribution made to a commercial “clearing house” is not considered paid until it is received by the employee’s fund, not by the clearing house. However, if you use the ATO’s Small Business Superannuation Clearing House, the contribution is “paid” when received by that clearing house.

If you miss a payment, taking action promptly is essential to accessing the ATO’s support services and minimising your exposure to penalties. You must lodge an SG charge statement with the ATO within one month of the missed quarterly due date and pay any necessary SG charges. These charges can accrue to more than the amount of contributions you would have paid if you had paid them on time, and it’s not deductible.

The charge is paid to the ATO, not your employee’s fund and general interest charge will accrue on any outstanding SG charges, and even may result in the ATO issuing a director penalty notice if it remains unpaid.

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Protect your small business by following these essential steps.

Cyber security is everyone’s business. With cyber threats becoming more frequent and
complex now is the time to make sure your business is secure.

Cyber security is everyone’s business. With cyber threats becoming more frequent and complex now is the time to make sure your business is secure.

This October, for Cyber Security Awareness Month, take the opportunity to talk to your employees and colleagues about the essential steps that you can all take to protect your digital identities and keep your business operating smoothly. With these 4 simple actions, you can greatly reduce the risk and impact of cyber threats on your business:

Use strong passwords that are long, unique and unpredictable.
Turn on multi-factor authentication (MFA).
Turn on automatic software updates.
Recognise and report phishing scams.

Use strong, long and unique passwords

Strong passwords are your first defence against unauthorised people trying to access your online accounts.

Across your business accounts, make sure you use long, unique and unpredictable passwords for each account. You could also try using ‘passphrases’ (passwords made of 4 or more random words) which are more complex, making it harder for criminals to crack.

For more on passwords, read our article: 6 steps to better password hygiene.

Turn on multi-factor authentication (MFA)

Multi-factor authentication, also known as MFA, adds an extra layer of protection by asking you in 2 or more ways to prove that an authorised person is logging in. It makes it much harder for others to access your online accounts.

For more on general cyber security and multi-factor authentication, read our article: The essential small business guide to cyber security.

Turn on automatic software updates

Turning on automatic software updates for your business devices and apps is one of the easiest ways to protect yourself online. Check your device's settings and make sure that automatic updates are turned on across all your business devices.

For more on software updates and general cyber security, read our article: The essential small business guide to cyber security.

Recognise and report phishing scams

(Phishing: the fraudulent practice of sending emails or other messages purporting to be from reputable companies in order to induce individuals to reveal personal information, such as passwords and credit card numbers.

Remember to always check the senders address. Scammers can go close but they can not use the exact same URL (domain address) as the company they purport to be from. If still in doubt then ring the company involved to double check. Doing these two things will go a long way to stopping you being scammed.)

Phishing is one of the most common scams used by cybercriminals to steal personal and financial information. To avoid getting caught by phishing, be cautious with unsolicited messages or links and encourage everyone with access to your business emails and messages to look out for red flags, like urgent language requesting you to take action.

For more on phishing, read our article: Spyware and stalkerware: How to check and protect your business devices.

More cyber security resources

By taking the 4 steps, you can greatly lower your risk of falling victim to cyber threats. For more practical advice and tips on how to protect your business, see Business Victoria’s range of cyber security resources:

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Aussies tired of ‘dodgy tax criminals’, warns ATO

The Tax Office has revealed that 250,000 tip-offs have been received about tax avoidance and dishonest behaviours since July 2019.

The ATO has received thousands of tip-offs from businesses, customers, community members, employees, family members and friends about people who have engaged in tax avoidance.

The Tax Office said it received 250,000 tip-offs since July 2019, with more than 47,000 received in the 2023–2024 financial year.

Australians are reporting tip-offs as they understand the detriment of cheating the tax system, the ATO said.

ATO assistant commissioner Tony Goding said dodging tax results in money being taken away from essential community services.

“Australians are fed up with dodgy behaviours in the community and are stepping up to help level the playing field by tipping off the ATO,” he said.

“Tip-offs about taxpayers not declaring income, demanding cash from customers, paying workers in cash to avoid paying tax and super, not reporting sales and where someone’s lifestyle doesn’t appear to match their income.”

Based on the number of tip-offs received from community members, the ATO estimated $16 billion in stolen taxes.

This was attributed to businesses having engaged in “cash jobs” each year.

Building and construction, cafes and restaurants, as well as hairdressing and beauty services, topped the list of industries the ATO was tipped off about during the 2023–2024 financial year.

Goding said people who will likely try to cheat their competitors and the community will likely try to cheat their customers too.

“These businesses are deliberately undercutting their competitors and gaining an unfair advantage in their industry,” Goding said.

“The number of reports we have received tells us that Aussies have had enough. Dodging your tax obligations clearly no longer passes the pub test.”

In the 2023–2024 financial year, NSW had the most reported tip-offs at 15,516.

This was followed by Victoria at 11,256 and Queensland at 10,629.

Goding noted that while Sydney and Melbourne had the most tip-offs, reports came from regional areas as well as capital cities.

The top regional towns for tip-offs were all in Queensland and included the towns of Mackay, Bundaberg and Caboolture.

According to the ATO, community tip-offs are a crucial source of information with almost 1,000 received every week.

During 2023–2024, 90 per cent of tip-offs received by the ATO were suitable for further investigation.

If deemed suitable for further investigation, cases were carried out by specialised teams and ATO task forces, such as the cross-agency shadow economy task force.

The ATO said in early 2024, community tip-offs helped the organisation crack down on businesses that used electronic sales suppression tools to avoid paying almost $23 million in tax.

Goding said making a tip-off is anonymous, quick, and simple.

“When we receive information through a tip-off, we cross-check the information and assess whether further action is required,” he said.

“A tip-off can provide the ATO with crucial information it needs as part of an investigation, sealing the fate of those who intentionally do the wrong thing.”

Imogen Wilson
15 October 2024
accountantsdaily.com.au

Claiming the tax-free threshold: getting it right

If you’re an Australian resident for tax purposes, you don’t have to pay income tax on the first $18,200 you earn each year, from any source. This is called the “tax-free threshold”.

If you have more than one job, change employers during the year, have a sole trader side gig or get government payments, it’s important to think about the tax-free threshold and which employer, job or payment you’ll claim it for.

When starting a new job, your employer should ask you to complete a withholding declaration. To claim the tax-free threshold, you must be an Australian resident for tax purposes on the declaration and answer “yes” to the question “Do you want to claim the tax-free threshold from this payer?”. Where you answer “no”, tax will be withheld from all income from that payer.

The ATO advises claiming the tax-free threshold once from your “main” job and ensure that additional jobs, etc do not use the tax-free threshold rates. Avoid claiming the threshold from multiple payers simultaneously unless you’re sure you’ll earn less than $18,200 total for the year. Overclaiming might make your take-home pay higher each pay cycle but will likely mean a tax debt later.

When changing jobs you can claim the threshold from your new payer even if you have claimed it from your previous one.

If you’re earning income outside of employment (eg as a sole trader) you’ll need to pay tax yourself on that income. Consider setting aside a percentage for tax or use pay as you go (PAYG) instalments each time you are paid.

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Businesses ghosting the ATO targeted in debt collection blitz

Clients failing to engage must “act now” or face rapid escalation of enforcement action, the Tax Office has warned agents.

The Tax Office has run out of patience with businesses that repeatedly ignore payment reminders, vowing to pursue them with aggressive enforcement measures in a new approach to debt collection.

Issuing a warning to tax agents on Wednesday, the ATO said business clients that refused to engage or company directors with multiple debts needed to “act now” or face swift penalties.

“We're changing our approach to collecting unpaid tax and super,” the ATO said.

“We are now focusing on businesses who refuse to engage with us and continue to ignore our SMS and letter reminders.”

“This approach may impact some of your business clients who have not responded to our past engagement attempts.”

For those that failed to engage or set up payment plans for unpaid GST, pay-as-you-go (PAYG) withholding or employee super, the ATO would rapidly escalate to director penalty notices (DPNs) and garnishee orders regardless of a business’s size.

Directors of multiple companies who allowed tax and super to go unpaid and likewise failed to engage with the ATO “can expect us to look at their debts more holistically”.

“These directors can expect to receive DPNs capturing the total value of these amounts across all related entities,” the ATO said.

“If these directors don’t take action, we can recover these amounts directly from them, putting their assets at risk.”

The step-up in enforcement action comes at a time when DPNs are at historically high levels, with 26,702 notices worth $4.4 billion issued last year.

It is a 50 per cent jump from the 2022–23 income year which saw 17,459 DPNs issued for $2.87 billion in debts.

Experts have told Accountants Daily that DPNs have become increasingly common as the ATO pursues its book of collectable debt, which ballooned from $26.4 billion in 2019 to over $50 billion after the COVID-19 pandemic.

The ATO said its new focus on unresponsive taxpayers was a “deliberate and targeted approach” to level the playing field for businesses that did the right thing.

“As we change our approach to collecting unpaid tax and super, we’re making it fairer for compliant businesses that do the right thing and fulfil their tax obligations,” it said.

“Not paying tax affects everyone, and it’s important we take action to help prevent businesses from putting other small businesses and employees at risk.”

It urged practitioners to assist it in its recovery efforts, encouraging clients to pay on time or set up payment plans before enforcement actions began.

“The key message we would like to ask you to pass onto your clients is, if they can pay, please do and if they need more time to pay, don’t ignore it – act now to check if you can put in place a payment plan online or reach out to us early for help.”

“If your clients are experiencing genuine financial hardship, additional options are available, including deferring payment due dates, interest remissions and access to compassionate release of their super.”

Christine Chen
25 October 2024
accountantsdaily.com.au