The Australian Taxation Office says it cannot rely on encrypted users’ own records

The Australian Taxation Office (ATO) stated that it cannot rely on crypto investors to track their crypto transactions and profits-even though most investors have tried their best.

At the 14th International ATAX Tax Management Conference held on November 23, ATO Commissioner Chris Jordan emphasize Many new cryptocurrency investors may not fully understand their Tax reporting obligations:

“In a rapidly growing industry for new investors, we cannot rely on taxpayers knowing that they need to record their investment income and capital gains and disclose them on their tax returns.”

“Our main concern is that many taxpayers believe that their cryptocurrency gains are tax-exempt, or only pay taxes when they cash their holdings into Australian dollars,” he added.

Jordan explained that the ATO has been studying how to “push” people in the right direction, such as pre-filling tax return data to prompt crypto users to report their investments.

The commissioner also stated that ATO has stepped up its efforts Transaction data matching In 2021, capacity will be improved by obtaining information from cryptocurrency demand-side platforms (DSP), shared registries, and brokers.

“We have expanded our data matching protocol to obtain more data from third parties to assist emerging investments such as cryptocurrencies.”

He added: “We are trying to improve the way we collect, manage, share and use data, but we are only scratching the surface.”

related: Reserve Bank warns Australians not to invest in “fashion-driven” cryptocurrencies

However, Jordan did point out that “most people are doing the right thing” because Australian individuals and small businesses have high tax reporting compliance or “tax performance”, while ATO’s “little or no intervention” “94% and 87% respectively.

Off-chain analysis

The companies that ATO may convene in the future are Commonwealth Bank of Australia Partner chain analysis.

On November 24th, Todd Lenfield, Regional Manager of Chainalysis Australia and New Zealand Tell The Australian Financial Review stated that his company hopes to provide key expertise to AUSTRAC and ATO.

“We want to have a dialogue with AUSTRAC about what they want to regulate and explain to the tax bureau the lessons that can be learned from the work done by the IRS. We can use the experience we have gained in this field and provide a local flavor,” he said .

The company currently provides blockchain analysis services for the FBI and the Internal Revenue Service. It also investigated Russia’s encryption business Suex OTC U.S. Department of the Treasury Facilitate payment transactions for ransomware in September.