According to the Australian Tax Office (ATO), it is not possible to depend on crypto investors for keeping track of their digital currency transactions as well as profits, even though they said that most investors did try to do their best. Chris Jordan, the Commissioner of the ATO, spoke at the 14th International ATAX Conference on Tax Administration conducted on Tuesday. He stated that a number of new crypto investors may not have a complete understanding of their tax obligations. According to the Commissioner, the sector is rapidly growing with new investors, so they could not depend on taxpayers for keeping records of their capital gains and investment income and disclose it in their tax returns.
He said that their primary concern was that many taxpayers are under the impression that their crypto gains are tax-free, or they believe they can only be taxed when they are converted into Australian dollars. Jordan stated that the ATO was working on ways of ‘nudging’ people in the correct direction like pre-filling the data on their tax returns for prompting crypto owners and users to mention their investments. According to the commissioner, the ATO has also enhanced their trading data matching capabilities this year by getting their data from share registers, crypto demand-size platforms, and brokers.
He said that they had expanded their data matching protocols to obtain more data from third parties in order to assist with emerging investments, such as that of digital currencies. He also asserted that they were putting in a lot of effort for improving the way they manage, collect, share and use their data, but had only managed to scratch the surface for now. However, Jordan was quick to note that most people did the right thing because Australia had high tax reporting compliance as well as tax performance of small businesses and individuals.
The commissioner said that the ATO did not have to intervene in most cases at 87% and 94%, respectively. Chainalysis, the partner of the Commonwealth Bank of Australia, is one company that the ATO might call upon in the future. Todd Lenfield, the country manager of Chainalysis in Australia and New Zealand, said on Wednesday that his company hopes to provide key expertise to the ATO and the Australian Transaction Reports and Analysis Centre (AUSTRAC). He said that they wanted to have discussions with the AUSTRAC about areas that they want to regulate and help the ATO in learning lessons from what the IRS is doing.
He added that they could take the experience they have and offer it with some local flavor. The company currently offers blockchain analysis services for the Internal Revenue Service (IRS) and the Federal Bureau of Investigation (FBI) in the United States. It also investigated Suex OTC, a crypto business based in Russia, which was targeted in September by the US Treasury Department for facilitating ransomware payments. Therefore, it is highly likely that Chainalysis can prove to be useful for the Australian tax authorities as well because they can provide meaningful data.
