Swyftx is one of the best cryptocurrency exchanges for Australian investors. But, the big question on its users' minds is whether Swyftx reports to ATO or not.
ATO or the Australian Taxation Office has some strict rules regarding capital gain taxes when it comes to crypto and other digital assets. Not complying with these rules can lead to fines and legal trouble for both the traders and the platform itself.
Join us as we take a closer look at how Swyftx handles the tax situation and complies with tax-related regulations in general.
What is ATO?
ATO is the primary revenue collection agency of the Australian government. It has three key responsibilities, including:
ATO is responsible for collecting taxes from Australian citizens, businesses, and corporations. It collects everything from income tax & goods and services tax (GST) to excise duties & superannuations.
Creating Tax Legislation
ATO is the key body behind creating new tax-related laws and updating old ones to modern standards. A great example is their relatively recent capital gain tax on cryptocurrencies. According to this legislation, crypto assets are considered an investment and you have to pay Capital Gains Tax (CGT) when you 'dispose' of the currency, for example when you sell, trade, or gift it.
Enforcing Tax Laws
If someone doesn’t list their crypto asset gains in their tax filing, it’s the ATO’s job to investigate the discrepancy and proceed accordingly. It is also the department responsible for handing out fines or taking further legal action in case of non-compliance with the tax law.
What is Swyftx?
Swyftx is a popular digital currency exchange that entered the market in 2017. It is headquartered in Brisbane, Australia — making it appealing to a lot of Australian traders, with 600,000+ users at the time of writing.
The Australian origin of this exchange also makes it easier for traders to deposit and withdraw with AUD using bank transfer, PayID, OSKO, POLi, and more.
The key defining features of Swyftx include:
- Over 320 unique crypto assets to trade;
- No minimum deposits;
- A low trading fee of just 0.6%;
- Clean and easy-to-understand trading UI;
- Zero withdrawal fees;
- 24/7 local live chat support team.
Swyftx’s operation in Australia is completely legal and within the bounds of Digital Currency Exchange (DCE) regulations. This is evident from the fact that this exchange is registered with the Australian Transaction Reports and Analysis Centre to combat issues like money laundering and terrorism financing.
That said, Swyftx does not have an Australian Financial Service Licence or any other similar licence.
Tax reporting requirements for cryptocurrency exchanges
Many novice traders and investors believe that they will only have to pay income tax if they’ve converted their crypto assets into AUD. While this is one event that triggers CGT, it is not the only type. For Australian citizens, any 'disposal' of cryptocurrency will trigger CGT, and this includes selling, gifting, trading, swapping, or buying goods/services with crypto.
ATO Requirements for Exchanges
To enforce this capital gain tax, digital currency assets in Australia are required to keep a complete record of their users' transactions. These records must contain information about:
- Date and time of each transaction;
- The open market value of the crypto assets;
- Identity of the asset’s owner.
Exchanges — like Swyftx — utilise their partnership with AUSTRAC to verify the legal identity of each investor and keep that ID attached to their account.
ATO then uses this information to enforce tax laws, collect overdue taxes, and hand out fines in cases of non-compliance.
The Australian Taxation Office expects every legally operating digital currency to follow these rules and hand over the transaction records when required.
For starters, this helps ATO collect taxes on crypto gains, which — given the number of Australians with crypto assets — is a significant amount.
Secondly, recording all this data also helps the Australian government track down and prevent attempts at money laundering and terrorism financing.
Does Swyftx report to ATO?
From what we’ve seen of this cryptocurrency exchange, yes Swyftx does report to the Australian Taxation Office. It helps ATO collect the capital gain tax in two key ways. These are:
As we mentioned earlier, Swyftx is registered as Digital Current Exchange with the Australian Transaction Reports and Analysis Centre. A major part of this registration is agreeing to record transaction information about Australian crypto investors and handing it over when inquired.
The AUSTRAC is then bound by the data-matching program to forward this information to ATO for tax enforcement. A few years ago ATO used the recorded data from exchanges like Swyftx to contact over 400,000 crypto investors and inform them of their overdue taxes.
Providing Tax-Reporting Tools
The second way Swyftx obliges to ATO’s capital gain tax is by providing complete transaction records to its Australian users. These users can then attach these reports to their tax files.
Swyftx also offers an API that allows investors to automatically integrate their crypto taxes into third-party tax-calculating services like Koinly.
In the same vein, Swyftx also has a handy capital gain tax calculator on its website. All you have to do is enter your crypto purchasing value, selling value, and taxable income in specified boxes.
Next, click on “Yes” if you’ve held the crypto asset for the past 12 months and press the “Calculate” button. The site will automatically tally up your assets and provide a relatively precise estimate of the amount taxed.
We also have a profit/loss calculator and a basic crypto tax calculator to help you understand your tax obligations.
We did not find any direct statement from Swyftx regarding tax regulation, ATO capital gain enforcements, or AUSTRAC data sharing requirements.
That said, it does have a full guide on its website on how to pay tax on crypto assets. So, it’s safe for us to assume that Swyftx is in compliance with Australian tax regulations.
Implications for Australian cryptocurrency traders
Swyftx is able to operate legally in Australia because it reports to ATO and follows the tax department’s regulations about recording investor data.
We recommend you — the crypto trader/investor — to do the same and pay full taxes for your crypto capital gains. With the handy tax calculator and automatic calculation API provided by Swyftx, there is no reason for you to file taxes without your crypto gains.
Potential Consequences of Non-compliance
Not complying with the ATO’s regulations is not a good idea and here’s why:
For the Exchange
Swyftx would likely lose its ability to legally operate in Australia if it doesn’t comply with ATO’s capital gain tax requirements. The same can happen if it refuses to collect or hand over the required information about investor transactions.
In the worst-case scenario, non-compliance can tank both the Swyftx exchange and the crypto investments of its users.
For the Individual Investor
For individuals, deliberately avoiding their capital gain tax on crypto is the same as committing any other form of tax fraud. It can lead to massive fines or even worse legal action and possible imprisonment.
According to the Commonwealth Director of Public Prosecutions, taxation fraud or regulatory offences referred by the ATO is also punishable by up to 10 years imprisonment.
Swyftx is an Australian exchange that complies with all the necessary tax regulations set by the ATO. It is also registered as a licensed Digital Currency Exchange with AUSTRAC which gives it further credibility as a legal crypto exchange.
At the end of the day, the real responsibility lies with you to accurately represent your cryptocurrency gains in your taxes. You can use the tools provided by Swyftx and other tax management services to make the final calculator easier.
Lastly, if you want to learn more about how the capital gain tax on crypto assets works, we recommend checking out the official ATO website here.