Receiving an ATO crypto tax letter can be stressful, especially if you’re unsure why you got one. Many Australians are surprised to learn that the ATO has access to detailed crypto transaction data, whether or not you declared it in your tax return. This can lead to unexpected notices landing in your mailbox or inbox, prompting immediate action.
The Australian Taxation Office (ATO) is increasing its efforts to ensure crypto users comply with tax laws, particularly those who may have traded, earned, or held digital assets without proper reporting. Whether it’s a simple oversight or a misunderstanding of tax rules, ignoring the ATO’s notice can lead to penalties, audits, or worse.
In this guide, you’ll learn what an ATO crypto tax letter actually means, why you received it, and exactly what steps you should take in 2025 to respond properly and stay on the right side of the law.
Why Did You Receive an ATO Crypto Tax Letter?
Many crypto investors are taken by surprise when they receive a letter from the ATO. However, these notices are part of a broader data-matching initiative aimed at identifying unreported cryptocurrency activity. Let’s break down the main reasons why you may have received one.
You Didn’t Report Crypto Transactions in Your Tax Return
If you lodged a tax return but failed to report your crypto transactions, whether buying, selling, or exchanging crypto, the ATO likely detected this discrepancy through its data-sharing program with exchanges. The letter acts as a warning and reminder that crypto disposal events are taxable and must be disclosed.
The ATO Flagged a Past Financial Year With Missing Crypto Data
Even if you didn’t file a return for a particular year, the ATO may still have transaction records from that period. This includes trading data, wallet usage, or exchange activity. If they notice missing lodgments, you may receive a letter urging you to file or amend a previous return.
You Were Part of the ATO’s Ongoing Crypto Data Sweep
In recent years, the ATO has significantly expanded its surveillance. In 2024, it requested crypto account data from over 1.2 million Australians. This means even minor crypto involvement can trigger a letter if your activity wasn’t properly declared, especially if you used AUSTRAC-registered exchanges like CoinSpot, Binance Australia, or CoinJar.
Read More: Ultimate Guide on Crypto Taxes in Australia
What Does the ATO Crypto Letter Contain?
If you’ve received an ATO crypto letter, it’s important to first understand what type of letter it is. The content varies depending on whether you’ve previously lodged a return or not, and how your crypto activity has been reported.
If You Lodged a Tax Return Without Declaring Crypto
In this case, the ATO may believe you failed to include all your crypto trades or earnings. The letter usually highlights that your tax return is missing crypto transaction data and asks you to review and verify your records. It may also request a report showing detailed transaction history, capital gains or losses, and other relevant calculations.
Many of these notices are routed through your tax software provider or arrive as email alerts. For example, if you filed your return via platforms like myTax or an accountant’s software, you might get an alert notifying you that the ATO believes you transacted in crypto during the financial year. These notices often come with instructions to correct the return.
If You Didn’t File a Return at All
If no return was submitted, the ATO sends a different version of the letter. This one typically states that based on third-party data, you may have owned or disposed of crypto assets during the financial year and are required to lodge a tax return. These letters often include an Information Schedule, which outlines transaction types, amounts, and the relevant financial year, based on the data received from exchanges and wallets.
In some cases, myGov alerts or ATO mail may mention undeclared crypto activity as part of a broader compliance check.
What Should You Do After Receiving an ATO Crypto Notice?
If you’ve received a crypto tax letter from the ATO, acting quickly is key. Ignoring the notice can lead to serious consequences, including audits and penalties. Here’s exactly what you should do next to address the situation properly.
Review Your Crypto Transactions for Previous Tax Years
Begin by gathering all your crypto transaction history for the years in question. This includes buys, sells, swaps, transfers, spending crypto, and even airdrops or staking rewards. Cross-check the dates mentioned in the ATO letter with your activity on exchanges and wallets. This full review will help you understand what’s missing or incorrectly reported in your previous lodgements.
Understand the Tax Impact of Your Transactions
Each crypto transaction can have different tax implications. Some may result in capital gains, while others may be treated as income. For example, if you received staking rewards, that’s generally treated as income at the time of receipt. Selling or swapping tokens might trigger capital gains tax. Knowing how each event is taxed will help you correct your filings accurately.
Use Crypto Tax Software to Speed Things Up
Manually reviewing and categorising hundreds of transactions can be exhausting. That’s where crypto tax software like KoinX can make things easier. These tools automatically import your transaction history, classify taxable events, and generate reports based on Australian tax laws. This saves you time and helps ensure your tax reports are accurate and audit-ready. Sign Up Now.
Talk to a Registered Tax Agent or Crypto Accountant
If your tax situation is complex or you’re unsure how to amend returns, consult a registered tax agent or crypto accountant. They can help you interpret ATO letters, communicate with the ATO on your behalf, and prepare amended returns that comply with regulations. Some specialists even deal directly with crypto tax corrections and audits, making the process smoother.
Consider Contacting the ATO to Discuss Options
Engaging with the ATO is far better than ignoring the letter. You can contact them to explain your situation, request more time to respond, or ask for a payment plan if you owe taxes. Being proactive shows compliance intent and may reduce penalties. If you’re nervous about reaching out, a tax agent can handle the communication for you.
Read More: How To Avoid Crypto Tax in Australia?
Why Did You Get a Letter Even If You Didn’t Sell Crypto?
Many taxpayers are surprised to receive an ATO crypto letter even when they haven’t sold any crypto. But under Australian tax law, selling isn’t the only event that can trigger a tax obligation. Here’s why the ATO may still contact you.
Crypto-to-Crypto Trades Are Taxable
Exchanging one crypto for another, such as trading Bitcoin for Ethereum, counts as a disposal under ATO rules. Even though no fiat currency was involved, this is still a taxable event. If you didn’t report these trades, the ATO may see that as a reporting omission and issue a letter.
Spending Crypto on Goods or Services Is a Disposal
Using crypto to buy products, subscriptions, or even NFTs is also treated as a disposal. You may not realise these purchases count as taxable events, but the ATO considers the fair market value of the crypto at the time of spending for CGT calculations. If these disposals weren’t included in your tax return, it could trigger a compliance alert.
Airdrops, Staking Rewards, and Mining Income Are Taxable
You can be taxed even if you didn’t sell your crypto. If you received tokens from an airdrop, earned staking rewards, or mined new coins, the ATO treats these as ordinary income based on their AUD value at the time of receipt. If you missed declaring this income, the ATO may have flagged it based on exchange or wallet data.
Holding Crypto Doesn’t Trigger Tax — But ATO May Still Check
Simply holding crypto isn’t taxable. However, if you hold crypto in an exchange account, the ATO may still include you in data-matching programs. This means you might get a letter asking you to confirm your holdings or clarify your activity, even if no disposal occurred.
Read More: Crypto Tax in Australia in 2025
What If You Already Filed Your Tax Return?
Even if you’ve already submitted your tax return, getting a crypto letter from the ATO means something may have been missed. The ATO uses third-party data to cross-check crypto activity, and if your return doesn’t match their records, they’ll alert you.
You May Need to Amend Your Tax Return
If your original return didn’t include all your crypto trades, staking rewards, or other taxable events, you’re required to file an amendment. This can be done easily through your myGov account or by asking your registered tax agent. Prompt correction reduces the risk of fines and interest charges.
Failing to Amend Could Trigger Penalties
Ignoring the discrepancy may lead the ATO to initiate an audit. This can result in administrative penalties, ranging from a few hundred dollars to 75% of the tax shortfall, depending on the severity of the omission. Even honest mistakes must be corrected once identified.
ATO Notices Often Include Prior Years
It’s not unusual for ATO letters to reference older financial years. If the ATO has information about your crypto use from a previous tax year, it may ask you to amend returns for that specific period. Keep in mind, the ATO’s data-matching system goes as far back as 2014.
What Happens If You Ignore the ATO Crypto Letter?
Ignoring an ATO crypto tax letter is not a harmless mistake. It can quickly snowball into serious consequences. Whether you missed reporting a few trades or failed to lodge a return altogether, the ATO views non-compliance as a red flag. Here’s what could follow if you choose not to act:
You May Face a Crypto Tax Audit
The ATO routinely audits taxpayers who fail to respond to compliance letters. If you don’t address the notice, you may be selected for a crypto-specific audit. These reviews can be extensive, requiring detailed records of transactions, exchange logs, wallet addresses, and fiat conversion rates. The burden of proof falls entirely on you and if your reporting doesn’t add up, penalties are likely to follow.
Expect a Full-Scale Investigation of Your Finances
Failure to respond could lead the ATO to suspect deliberate evasion. This may trigger a broader investigation into all your financial activities, not just crypto. The ATO may request data from exchanges, banks, and payment platforms, both local and international. Once flagged, your profile stays on their radar for future scrutiny.
You Could Be Hit With Serious Penalties
If the ATO determines you’ve underreported or failed to report taxable crypto events, you may be penalised up to 75% of the shortfall amount. Penalties grow if the ATO believes you acted intentionally or tried to conceal earnings. Interest charges will also apply from the original due date of your tax return, increasing your total tax liability.
Missing Deadlines Can Compound the Problem
Not responding to an ATO crypto letter delays your ability to fix errors before enforcement action begins. It could lead to automatic assessments or default notices. In serious cases, prolonged inaction may also affect your eligibility for repayment plans or reductions in penalties, especially if your case escalates to legal recovery processes.
Read More: Is Crypto Mining Taxable in Australia?
How to Fix Mistakes with Self-Correction?
The ATO encourages voluntary correction and provides a self-amendment pathway to fix errors:
- Use myGov: You can revise a past tax return by logging into your myGov account and navigating to ATO > Tax > Lodgments > Income Tax.
- Engage a Tax Agent: If you’re unsure what needs correcting, a tax agent can help review your transaction history and lodge amended reports on your behalf.
- Use Crypto Tax Software: Tools like KoinX can help you identify missing data, calculate the right gains or income, and generate ATO-compliant summaries to submit quickly.
Taking early action demonstrates good faith and can significantly reduce penalties, or help you avoid them altogether.
Read More: NFT Taxes in Australia in 2025
How KoinX Helps You Respond to an ATO Crypto Letter?
Getting a letter from the ATO about your crypto taxes can feel stressful, especially if you’re not sure what triggered it. This is where KoinX steps in as your go-to solution. From automatically fetching your crypto history to preparing ATO-ready reports, it takes the complexity out of compliance. So you can respond accurately and on time.
Connects with 300+ Exchanges and Wallets
It supports seamless integrations with over 300 exchanges, wallets, and blockchains used by Australian investors. Whether you’re trading on Binance, holding assets in MetaMask, or using DeFi platforms, KoinX fetches your full transaction history in minutes. This eliminates the manual effort of piecing together records and ensures nothing is missed, an essential step when responding to an ATO notice.
AUD-Based Tax Calculations in Real-Time
ATO tax reports require transaction values to be recorded in Australian Dollars based on the fair market value at the time of the event. KoinX automatically converts every crypto transaction to AUD in real time using trusted exchange rates. This accuracy protects you from errors related to wrong conversion rates or timestamp mismatches, common triggers for tax letters.
Auto-Categorisation and Error Detection
KoinX uses smart rules to classify each transaction type, such as buy, sell, swap, airdrop, mining, staking, and more. It also detects duplicates, missing fields, and inconsistencies that could raise flags with the ATO. You’ll get real-time alerts on potential issues, with suggested fixes, ensuring your records are audit-ready before submission.
Generates ATO-Compliant Tax Reports
Once your transactions are reconciled, KoinX generates clean, structured tax reports that align with ATO filing requirements. Whether you need a report for one financial year or multiple, the tool segments gains, losses, and income clearly, making it easy for you or your accountant to amend previous returns or prepare an updated lodgement.
With KoinX, you can handle ATO crypto notices confidently and avoid future tax trouble. Sign up today to simplify your crypto tax journey.
Conclusion
Receiving an ATO crypto tax letter can feel overwhelming, especially if you’re unsure what triggered it or how to respond. But the key is not to panic, review your transactions, understand what needs correcting, and act quickly to minimise penalties or further scrutiny.
KoinX helps you stay one step ahead by tracking all your crypto activity and generating ATO-compliant reports. Whether you’re responding to a letter or just staying proactive, using KoinX makes it easier to manage your obligations. Get started with KoinX today and take control of your crypto taxes before the ATO follows up.
Frequently Asked Questions
What Should I Do If I Made a Crypto Transaction but Forgot to Report It?
If you missed reporting a crypto transaction, you should amend your previous tax return. You can do this through the ATO’s myGov portal or consult a tax professional for help. Addressing the issue promptly can reduce penalties and prevent further compliance action.
Will the ATO Contact Me Even If I Use International Exchanges?
Yes, the ATO receives data from both domestic and some international exchanges. Global cooperation between tax authorities makes it possible for the ATO to access your transaction details even from overseas platforms, especially if you’re an Australian tax resident.
Can I Get Penalised If I Ignore the ATO Crypto Letter?
Yes, ignoring an ATO crypto notice can lead to audits, penalties, and further investigation. The ATO may consider non-response as deliberate non-compliance. It’s best to respond promptly, review your tax records, and disclose accurate information to avoid harsher consequences.
Do I Need to Report Crypto Gifts or Donations?
Yes, gifting crypto can be a taxable event under capital gains tax rules. If you gifted or donated crypto, you need to report it in your tax return. The capital gain or loss is based on the market value at the time of the gift.
How Do I Check If My Crypto Activity Was Already Reported?
You can check transaction records in your exchange accounts and compare them with your submitted tax returns. KoinX also helps by identifying missing transactions and providing a detailed portfolio overview. It’s a reliable way to ensure accurate and complete tax reporting.
