Secretive 'wash sales' in the ATO's cross hairs
Aussies trying to secretly carry out "asset wash sales" to boost their tax returns will be slugged with a range of penalties, the Australian Taxation Office has warned.
Wash sales are a type of tax avoidance the ATO says it will use "sophisticated data analytics" to detect, as millions of Australians get set to lodge their tax claims.
The scheme typically involves selling assets such as crypto and shares just before the end of the financial year, and after a short period of time buying back the same or similar assets.
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The ATO warned taxpayers engaged in wash sales that they will face swift, stiff penalties. Supplied
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This method of tax avoidance creates a loss to offset against a gain.
Assistant Commissioner Tim Loh said some tax accountants are actively helping clients wash assets this way.
"Don't hang yourself out to dry by engaging in a wash sale," Loh said, while detailing various tax, interest and penalties that anyone caught may face.
"Most tax advisors do the right thing, but a small number encourage this behaviour," he said, warning of "serious consequences" for offenders.
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Some accountants have been accused of encouraging and promoting 'asset washing'. iStock
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A wash sale is different from normal buying and selling of assets because it is done for the artificial purpose of generating a tax benefit for the current financial year.
If carried out, the taxpayer can realise a capital gains loss and obtain an unfair tax benefit.
Using powerful analytics tools, the ATO said it can identify wash sales through access to data from share registries and crypto asset exchanges.
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