Australian Cryptocurrency Investors are Not Trustworthy; Can't Keep Transaction Themselves

Usha  |  Nov 24, 2021

The Australian Taxation Office (ATO) has stated that cryptocurrency investors cannot be depended upon to track their investment profits and tax liabilities. As more new investors enter the market, ATO commissioner Chris Jordan says the agency relies increasingly on data from exchanges and brokers. 

Australian Taxation Office No Longer Trusts Cryptocurrency Investors

The Australian Taxation Office (ATO) says it can no longer rely on taxpayers to manage the complex world of income tax, capital gains, and blockchain record-keeping on its own as first-time investors continue to flock to cryptocurrencies.

According to Finder data, roughly 18 percent of the population in Australia possessed a stake in cryptocurrencies like Bitcoin, Ethereum, or Cardano in October, up from 13 percent in March. However, the ATO warns that broad use comes with unique tax implications, as profits from cryptocurrency investments are subject to capital gains tax (CGT) under Australian law.

ATO commissioner Chris Jordan said many novices could not resolve these requirements independently, speaking at the International Conference on Tax Administration in Sydney on Tuesday.

"We can't rely on taxpayers knowing they need to maintain track of their investment income and capital gains and disclose it on their tax returns in a sector that is fast increasing with new investors," he said.

Instead, the ATO, according to Jordan, has resorted to exchanges and brokers for such data, allowing the government body to pre-fill 89.5 million pieces of data throughout the 2020-2021 fiscal year.

ATO Have Data - Matching protocols

"We have data-matching mechanisms [in place] to ensure persons who are trading bitcoin are paying the proper amount of tax," ATO associate commissioner Tim Loh said in May.
"Our biggest concern is that many taxpayers assume their cryptocurrency earnings are tax-free or only taxable when they cash out their holdings in Australian dollars," the official added. According to Jordan, individual tax "performance" remains around 94 percent, showing that most Australians are aware of their duties.

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