The Australian Taxation Office (ATO) is set to use cryptocurrency transaction data collected in bulk from Australian cryptocurrency designated service providers (DSPs) to enable people trading in cryptocurrency to pay the right amount of tax. The data will include cryptocurrency purchase and sale information.
The ATO will also use the data to improve the integrity of the tax system by identifying taxpayers who fail to disclose their cryptocurrency income details correctly. This will help tax payers meet their tax obligations through pre-filling of tax returns.
The ATO estimates that there are between 500,000 to one million Australians who have invested in crypto assets. The tax payer will be given the opportunity to verify the information derived after data matching, before any compliance action is undertaken.
The analysis of the collected data will also enable ATO to crack down on undeclared taxable capital gains and unexplained wealth as cryptocurrency has been used to move funds within the black economy to hide money offshore.
The ATO said it is working in conjunction with regulators such as the Australian Transaction Reports and Analysis Centre (AUSTRAC) and the Australian Securities and Investment Commission (ASIC) to ensure that tax law requirements align with a whole of system approach.
The ATO is also among the Tax enforcement authorities of five nations that have in July established a joint operational alliance to fight international tax crime and money laundering, including cybercrimes facilitated through cryptocurrencies.
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