Australia is clamping down on the taxation of cryptocurrencies.
The country’s tax office is collecting bulk records from Australian cryptocurrency service providers as part of a data matching scheme to make sure traders are paying the correct amount of tax.
Data matching is an administrative and law enforcement tool whereby information from a variety of third-party sources is compiled electronically, validated, and analyzed to enable people to do things such as pre-filing their tax returns.
In its statement, the Australian Tax Office (ATO) says it is estimated that 500,000 to 1,000,000 Australians have invested in crypto-assets.
“The ATO uses third party data to improve the integrity of the tax system by identifying taxpayers who fail to disclose their income details correctly. We also use third-party data to assist taxpayers in meeting their tax obligations through pre-filling of tax returns,” said ATO’s deputy commissioner Will Day.
Once the matching process is complete, citizens will be notified by ATO and asked to verify the information collected, prior to compliance action being taken. They will have at least 28 days to clarify any information. “We want to help taxpayers to get it right and ensure they are paying the correct amount of tax,” Day added.
Additionally, ATO is also working on a joint international effort as part of the Joint Chiefs of Global Tax Enforcement (J5), which is seeking to investigate cryptocurrency-related tax evasion and money laundering, said Day.
In its statement, ATO said cryptocurrency and blockchain technology was seen as an enabler of existing risks.
Cryptocurrency, it noted, had been used to move funds within the black economy, and hide money offshore.
Similarly to cash, which can be pocketed and go undeclared, cryptocurrencies are difficult to tax. But with a widely covered report by the Australian Competition and Consumer Commission (ACCC) saying that fraudsters in the country earned $4.3 million with cryptocurrency scams last year, it’s hardly surprising that authorities want to strengthen their hold on the industry.
That’s not to say, of course, that the likes of Bitcoin are only used by criminals. Will cryptocurrency traders abide with the new rules? I guess we’ll have to sit, and wait.
Luckily for Australian cryptocurrency traders, KPMG announced its “Crypto Tax Estimator” tp help hodlers figure out how much tax they could owe as a result of their tradings in November last year.