Australia's financial press is expecting that the Australian Taxation Office (ATO) will take a hard stance on cryptocurrency investors this tax season, with the ATO recently vowing to leverage international data-matching agreements in order to track the taxation obligations of Australian cryptocurrency traders.
ATO to Leverage International Data-Matching Agreements to Target Crypto Traders
The Australian Tax Office has announced that it will leverage data sharing agreements made between Australia and other nations to determine the tax obligations of Australian cryptocurrency investors.
"We're alert to the potential compliance risks that arise from cryptocurrencies but we're not really alarmed about them," ATO acting deputy commissioner Martin Jacobs told Australian Financial Review.
"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," Mr. Jacobs added.
Mr. Jacobs also emphasized that changes to anti-money laundering rules mandating that Australian crypto exchanges identify wallet holders "will enable data exchanges to collect cryptocurrency trading information, which we'll be able to access and use in our engagement activities."
Many Traders May be Unaware of Tax Obligations
Paul Drum of accounting firm CPA Australia has speculated many Australian cryptocurrency users may not be fully aware of their tax obligations, stating "We're at the pointy end of a financial year of seismic profits and if people were thinking they could fly under the radar, I've got bad news. […] People wrongly believe they're getting a windfall gain that isn't taxed. That could be a costly mistake."
Mr. Drum also warned that many cryptocurrency traders are not aware of the tax event triggered by each "disposal" of virtual currency holdings, emphasizing that cryptocurrency-to-cryptocurrency trades require that traders declare any profits generated. "Even if you traded your ripples for bitcoin, you have to figure out whether you made a profit on the trade," he said.