The Australian Internal Revenue Service (ATO) says it cannot rely on crypto investors to track cryptocurrency transactions and profits, even if most investors do their best.
Speaking at the 14th International ATAX Conference on Tax Management on November 23, ATO Commissioner Chris Jordan emphasized that many new crypto investors may not fully understand their tax reporting obligations:
“In a rapidly growing sector with new investors, we cannot trust taxpayers to track their investment income and capital gains and report their tax returns.”
“Our main concern is that many taxpayers believe that their earnings from cryptocurrency are tax-deductible or only taxable when the assets are bought back in Australian dollars,” he added.
Jordan explained that the ATO is working on ways to “alert” people in the right direction, such as pre-filling tax returns so that cryptocurrency users report their investments.
The commissioner also said that the ATO expanded its ability to match trade data in 2021 by collecting information from cryptocurrency ordering platforms (DSPs), securities registries, and brokers.
“We have expanded our data mapping protocols to receive more data from third parties to help with new investments such as cryptocurrency.”
“We are working hard to improve the way data is collected, managed, shared and used, but we are only superficial,” he added.
On this topic: The Reserve Bank warns Australians not to invest in the crypto-giant
However, Jordan noted that “most people are doing the right thing” because compliance with tax reporting or “tax targets” for individuals and small businesses in Australia is high with “little or no interference” from ATOs – 94% and 87%, respectively. …
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One company that the ATO may turn to in the future is the Commonwealth Bank of Australia’s partner bank, Chainalysis.
On November 24, Todd Linfield, country director for Chainalysis Australia and New Zealand, told the Australian Financial Review that his company hopes to provide core expertise to AUSTRAC and ATO.
“We want to talk to AUSTRAC about what they want to regulate and explain to the tax office what can be learned from what the tax authorities are doing. We can draw on local experience and provide insight into local conditions,” she said.
The company is currently providing blockchain analysis services to the FBI and investigating Russian crypto firm Suex OTC, which was targeted by the US Treasury in September to facilitate ransom transactions.