The Australian Tax Authority (ATO) will seek international cooperation to tackle hiding of cryptocurrency income, ATO acting deputy commissioner Martin Jacobs told local media on Friday. This year Australian traders must file tax declarations about their crypto incomes for the first time after ATO declared virtual coins like Bitcoin an asset liable for capital gains tax (CGT).
In a bid to fight attempts for tax avoidance, ATO plans to use data-matching techniques based on data sharing agreements with other countries, although the governmental agency is “not really alarmed” of major crypto-assets compliance risks.
“Where people attempt to deliberately avoid these obligations we will attempt to take action. We have a range of existing powers that are designed to address unexplained wealth and conspicuous consumption that may arise through profits derived through cryptocurrency investment,” Jacobs told Australian Financial Review newspaper.
“This will enable data exchanges to collect cryptocurrency trading information, which we’ll be able to access and use in our engagement activities,” Jacobs said.
According to Jacobs the 2017 cryptocurrency price spike is a “bubble” and tax implications from major gains will be “confined to a few individuals.”
“Our feeling is that the vast majority of investors who joined the bubble in 2017 are likely to be in the loss position as opposed to a gain. The other assumption is they probably haven’t disposed of their cryptocurrency. They might just be holding it,” Jacobs added.
As stipulated in the ATO tax requirements, a CGT event for individual crypto-holders occurs when they trade, exchange or gift digital coins, convert cryptocurrencies to fiat money and use cryptos in buying goods or services. Companies are subject to trading stock rules, not CGT taxation when making virtual currency transactions.
The Australian Tax Authority has record-keeping provisions for all types of transactions with cryptocurrency, including for an investment, personal or business use. Individuals and companies must record the date of transactions and exchange and wallet information, among other measures.
Australia is part of the recently announced international alliance, J5, which unites tax authorities form the United States, the United Kingdom, Canada, Australia and the Netherlands in fighting money laundering and tax avoidance, including crimes related to cryptocurrency.