Tax Office in Australia can’t rely on crypto investors’ own reportings

Amidst the serious steps by regulators all over the globe, the Australian Tax Office (ATO) said that it does not trust cryptocurrency investors in Australia on their crypto transactions and profits..

On November 23, Chris Jordan, ATO commissioner, while speaking at the 14th ATAX Conference on Tax Administration conference, pointed out that many new crypto investors are unaware of the correct tax system and reporting obligations. He stated:

“In a sector that is growing rapidly with new investors, we can’t rely on taxpayers knowing they need to keep records of their investment income and capital gains and disclose it on their tax returns.”

The biggest worrying sign, he continued, is that many taxpayers assume that their crypto gains are tax-free or only taxed when they cash out their holdings in Australian dollars.

The ATO has been working on measures to “nudge” people in the right direction, like pre-filling data on tax returns to encourage crypto users to record their holdings, according to Jordan.

Australia, like many countries, still has divided views as on the same day a senator says that crypto can solidify the country’s economy, and the retirement fund industry says that it is too risky to include crypto in institutional portfolios.

Commissioner further added that the ATO has also increased its trade data matching powers in 2021 by obtaining information from crypto demand-side platforms (DSPs), brokers, and share registries.

He further said that the country is working hard to enhance its methods of collecting, sharing, managing, and using data.

Chainalysis starts contributing to Australia

ATO can call the Chainalysis in the near future, which has entered the country with a new office after partnering with the Commonwealth Bank of Australia. 

Commonwealth Bank recently said that it is risky to miss out on crypto after starting crypto trading for its customers on its platform.

The Australian Financial Review reported on November 24 that Todd Lenfield, the country manager of Chainalysis in Australia and New Zealand, hopes to contribute the company’s expertise to the AUSTRAC and the ATO.

The company currently offers blockchain analysis services to the Federal Bureau of Investigation and the Internal Revenue Service in the United States. It also investigated Suex OTC, a Russian crypto company that was targeted by the US Treasury Department in September for facilitating ransomware payments.