Cryptocurrencies serve a multitude of purposes, one of the main ones, according to their ardent proponents, is their ability to evade the clutches of the taxation authorities. However, this might not be the case in Australia, with the island country’s taxation authority taking a more stringent approach towards decentralized currencies.
According to the deputy commissioner of the Australian Taxation Office [ATO] Will Day, key information will now be collected from the cryptocurrency designated service providers [DSPs] in an effort to ensure that crypto-traders are adhering to the ATO’s tax guidelines.
“Cryptocurrency use can have implications for a range of tax obligations, potentially superannuation too, so its more us responding to a new and emerging marketplace in the economy.”
The ATO further made it clear that this operation was, by no means, a mere tax evasion problem with several key domestic authorities like the Australian Securities and Investments Commission and the Australian Transaction Reports and Analysis Centre also kept in the loop.
Day added that the DSPs would be key in the process of procuring information on cryptocurrency trades;
“This data will be collected under notice from the DSPs on an ongoing basis.”
According to the Sydney Morning Herald, Day confirmed that data regarding crypto-trades for the financial year of 2014/15 to the current year had already been obtained. The same was provided by DSPs, brokerage services, and cryptocurrency exchanges, among others.
Cryptocurrency taxation has been making the rounds in the halls of the ATO since 2014, with the tax authority updating their policies for the same, added the report.
A statement issued by the ATO said that the cryptocurrency and blockchain technology were to be viewed as an “enabler of existing risks” for the tax authority. This deviates from the general consensus around blockchain, as several government agencies are openly embracing the technology.
The statement references the role of cryptocurrency as an enabler of the “black economy” used to “hide money offshore” leading to “unexplained wealth and undeclared taxable capital gains”.
In terms of the regulatory effect itself, the ATO stated that investors who were suspected by the data-matching scheme would be contacted by the tax authority to back their information. The investors would have a period of 28 days to “clarify” the data obtained by the DSPs.
The ATO’s guidelines come at a time when the country’s crypto-customers have lost over AUD $6.1 to scams and frauds in the previous year alone. In 2017, the figure was AUD $2.1 million, which points to a 190 percent increase in 2018, according to a report by the Competition and Consumer Commission.
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Graduate of Finance and Economics, interested in the intersection of the world of decentralized currency and global governance.