A recently published survey revealed that risk is the biggest reason why Australians still lack confidence in cryptocurrency. 43 percent of Australians who responded to the survey said that the volatility of cryptocurrency was their biggest deterrent to buying it. This is a 14 percent increase on the same answer from a survey published in January 2021.
32 percent of people surveyed said that they would rather buy shares or have money in their savings account. Another 25 percent said that they believe cryptocurrencies are overvalued.
This illustrates that the number of Australians who believe cryptocurrency is overvalued has grown by 9 percentage points since January 2021.
Knowing how and where to buy cryptocurrency is another common hurdle. 22 percent of participants who were surveyed said that they are unsure of how to start.
Furthermore, 19 percent of respondents said that they didn’t know what cryptocurrency actually is.
Results from the survey suggest cryptocurrency is rising in popularity among Australians especially Gen Z.
One in six Australians around 17 percent) now own cryptocurrency. This is an increase of 5 percentage points since January 2021.
Another 13 percent said they did not own digital coins but planned to buy them within the next year.
Almost a third of Gen Z now own cryptocurrency close to 31 percent. This figure that has doubled since January 2021.
Bitcoin continues to remain the most popular cryptocurrency, owned by 9 percent of Australians, followed by Ethereum at 8 percent, Dogecoin 5 percent and Bitcoin Cash at 4 percent.
Despite its popularity, Bitcoin ownership has dropped 4 percentage points from 13 percent in January 2021.
The ATO Plans To Crackdown On Cryptocurrency This Year At Tax Time
Last month, the ATO warned taxpayers that they will likely be contacted as there are growing concerns that many taxpayers incorrectly believe their cryptocurrency gains are tax-free or only taxable when their holdings are cashed into Australian dollars.
Data from the ATO illustrates that there are over 600,000 taxpayers across Australia who have invested in crypto assets following a surging interest in the currency over the duration of the covid-19 pandemic.
Furthermore, the ATO anticipates that their proactive engagement will result in at least 300,000 taxpayers to make note of cryptocurrency in their 2021 tax returns.
The ATO’s tough crackdown is followed by a softer educative approach adopted through the 2020 income year. Last year, the Tax Office contacted 100,000 taxpayers who had traded crypto assets and provoked 140,000 taxpayers to lodge returns.
The ATO is concerned that the anonymous nature of trading crypto assets led taxpayers to believe their investments were untraceable. ATO will head into tax time with access to more data and the ability to track those investing in crypto assets more closely.
The ATO is alarmed that a number of taxpayers think that the anonymity of cryptocurrencies provides a licence to ignore their tax obligations.
Although it appears that cryptocurrency operates in an anonymous digital world, the ATO has the power to closely track where it interacts with the real world through data from banks, financial institutions and cryptocurrency online exchanges to follow the money back to the taxpayer.
The ATO will use data-matching methods to link transactions from cryptocurrency-designated service providers to individuals’ tax returns, to ensure investors are paying the correct amount of tax.
The ATO has estimated that somewhere between 500,000 and one million Australians have currently invested in crypto related assets. Many of these individuals have failed, or will fail, to properly report the profits they have made for tax purposes.
In response to this common occurrence, the ATO is gathering bulk records from Australian cryptocurrency designated service providers (DSPs) as part of a data matching program which aims to ensure that people trading in cryptocurrency are paying the amount of tax that is required for them to pay.
The data that has been provided to the ATO consists of cryptocurrency sales and purchase information. The data will identify Australian taxpayers who have failed to disclose their income details correctly.
A number of Australian taxpayers may find themselves being contacted by the ATO as a result of the data matching exercise. Those who are contacted will be given an opportunity to amend their tax returns to include any information highlighted by the ATO.
Individuals will have a timeframe of 28 days to clarify any information that has been obtained via the data provider. Thousands of letters have already been issued to taxpayers across the country and more will continue to be sent.
Recipients of the letters who fail to modify their tax return to include the missing transactions will be met with more forceful compliance action which could include a full tax audit.