Australian Tax Office says it can’t rely on crypto users’ own records

Australian Tax Office says it can't rely on crypto users' own records

The Australian Tax Office (ATO), says that it cannot rely on crypto investors for tracking their profits and transactions. However, most investors do their best.

Chris Jordan, ATO Commissioner, stressed that new crypto investors might not fully understand their tax reporting obligations at the International ATAX Conference on Tax Administration on Nov. 23.

“In a sector growing rapidly with new investors we cannot rely on taxpayers understanding they need to keep track of their capital gains and investment income, and report it on their tax returns.”

He said that the main concern was that many taxpayers believe that cryptocurrency gains are either tax-free or only taxable if they are cashed into Australian dollars.

Jordan stated that the ATO is working to help people “nudge” them in the right direction. For example, pre-filling tax returns data to encourage crypto users to report their investment.

Commissioner also stated that the ATO has increased its trading data matching capabilities for 2021 through sourcing information from share registries, brokers, and cryptocurrency demand-side platform (DSPs).

“We have expanded our data matching protocols in order to obtain more data from third parties for emerging investments such as cryptocurrency.”

He said that while we are improving the way we collect and manage, share, and utilize data, we are only scratching the surface.

Related: Reserve Bank warns Aussies about betting on ‘fad-driven’ cryptocurrency

Jordan noted however that “most people do what is right” in tax reporting compliance. The “tax performance” for individuals and small businesses in Australia, at 94% and 87%, was high and there was “little to no intervention” by the ATO.

Chainalysis is down below

Chainalysis, a partner of the Commonwealth Bank of Australia, is a firm the ATO might call upon in the future.

Chainalysis’s country manager in Australia, New Zealand and Australia Todd Lenfield stated to the Australian Financial Review on Nov. 24 that his company is looking to offer key expertise to AUSTRAC or the ATO.

“We would like to talk with AUSTRAC about the regulations they are seeking to implement and to explain to the tax department the lessons we can learn from the IRS. He said that we can draw on the experience in the area and give it a local flavor.

It currently offers blockchain analysis services to the U.S. Federal Bureau of Investigations and Internal Revenue Service. The firm also investigated Russia’s crypto business Suex OTC, which was targeted in September by the U.S. Treasury Department for facilitating ransomware payments.

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