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.
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.
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.