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ATO Says it Cannot Rely on the Tax Records of Crypto Investors

cryptoknowmics.com 29 November 2021 07:30, UTC

Even though most investors do their hardest, the Australian Tax Office (ATO) says it can't rely on crypto investors to maintain track of their tax records, transactions, and earnings.

"Our major worry is that many taxpayers assume their cryptocurrency earnings are tax-free or only taxable when they cash their holdings back into Australian dollars," the ATO commissioner stated.

ATO commissioner Chris Jordan spoke at the 14th International ATAX Conference on Tax Administration, emphasizing that many new crypto investors may be unaware of their tax reporting responsibility:

"We can't rely on taxpayers to track their to maintain track of their investment income and capital gains and report it on their tax returns in a sector that is continually increasing with new investors."

ATO Wary of Crypto Investors Keeping Track of their Tax Records and Transactions

The ATO has been working on measures to "nudge" people in the correct direction, including pre-filling data on tax forms to persuade crypto users to record their assets, according to Jordan. The ATO has also increased its trade data matching capabilities in 2021, according to the commissioner, by obtaining information from cryptocurrency demand-side platforms, share registries, and brokers.

"To help with developing ventures like cryptocurrencies, we've broadened our data matching procedures to collect additional data from third parties."

"We're working hard to improve how we gather, handle, distribute, and use data," he continued, "but we're only exploring the possibilities."

Chainalysis the Partner of CBA

Chainalysis, a partner of the Commonwealth Bank of Australia, is a business that the ATO may rely on in the future.

Todd Lenfield, Chainalysis's national manager for Australia and New Zealand, told the Australian Financial Review on Wednesday that his company hopes to contribute critical knowledge to the Australian Transaction Reports and Analysis Centre (AUSTRAC) and the Australian Taxation Office (ATO).

"We want to talk to AUSTRAC about what they're looking to control, and we want to communicate to the tax office the lessons we've learned from the IRS." He remarked, "We can take our experience in the space and give it a local character."

The US Federal Bureau of Investigation and the Internal Revenue Service are presently using the firm's blockchain analytical services. It also looked into Suex OTC, a Russian crypto company that was pursued by the US Treasury Department in September for enabling ransomware payments.

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