News for all Australians who have been dodging the Australian Tax Office (ATO), they have decided to crack down on people who have been hiding their cryptocurrency trading gains offshore. To this end, the ATO is using data sharing agreements with other nations to track these illegitimate accounts.
The use of advanced data-matching techniques through existing data sharing agreements with other nations is currently on the charts. This has been undertaken to track any tax dodging since cryptocurrency is considered an asset and deserves to be taxed. Cryptocurrencies like bitcoin are listed as an ‘asset’ liable for capital gains taxes (CGT) under ATO’s official guidance, which was published earlier this year.
The country’s accounting body, CPA Australia, has put the number of Australian taxpayers to file crypto-related declarations for the first time ever as ‘hundreds of thousands’.
ATO’s acting deputy commissioner Martin Jacobs is “not really alarmed” by potential crypto-specific tax compliance risks as of now. He, however, stated that: “Where people attempt to deliberately avoid these obligations we will attempt to take action. We have a range of existing powers that are designed to address unexplained wealth and conspicuous consumption that may arise through profits derived through cryptocurrency investment.”
Currently, ATO is using a 100-point identification check system using advanced data-matching techniques to investigate With the new regulations in place, authorities can identify and monitor the transactions of any single investor registered with Australia’s domestic cryptocurrency exchanges.
“This will enable data exchanges to collect cryptocurrency trading information, which we’ll be able to access and use in our engagement activities,” said Jacobs.
Some cryptocurrency investors, have argued that since crypto is an anonymous payment system; it shouldn’t be taxed under the existing tax norms. The current rules state that if traders lose in the crypto market, it will be considered as a write-off. But if there is a capital gain, the net capital gain will be considered as the difference between the gain made and the loss incurred.
For those wanting to avoid tax on cryptos, there are crypto friendly towns in Australia, which includes The town of 1770 and Agnes Water, where digital currency can be used for virtually anything.
Australia is also part of the five-member Joint Chiefs of Global Tax Enforcement (J5) alliance, alongside tax officials from Britain, Canada, the U.S., and the Netherlands. The group confirmed last week, a new joint-initiative to specifically combat transnational fiscal crimes using cryptocurrencies.
Jacob feels that the major gains will be ‘confined to a few individuals’. He added “Our feeling is that the vast majority of investors who joined the bubble in 2017 are likely to be in the loss position as opposed to a gain. The other assumption is they probably haven’t disposed of their cryptocurrency. They might just be holding it.”