Australian Tax Office To Crack Down On Crypto Tax Evaders
The Australian Tax Office is going to take strong action this year to find those who evaded taxes on their cryptocurrency transactions.
The Australian Tax Office will use data matching and “100-point identification checks" to track down crypto investors, as well as bilateral tax treaties and anti-money laundering commitments to get more information out of the traditionally anonymous crypto sphere and markets.
Paul Drum, a member of the National Tax Liaison Group said that this move is a “watershed moment for the ATO” and would “[enable] them to access and thoroughly review cryptocurrency exchange account data for the first time:”
“The effectiveness of the anonymity of Bitcoin and other cryptocurrencies is starting to fade. These coming changes mean that people shouldn’t assume they can hide forever behind Blockchain technology, nor should they assume there are no tax consequences.”
In May 2017, the Australian government confirmed that it would treat Bitcoin “just like money,” and that it would no longer be subject to double taxation.
The end of double taxation legislation was officially passed in September 2017, meaning that the goods and services tax (GST) would no longer be applied to both the purchase of the crypto and again for its use in an exchange. The Sept. 2017 legislation also says that crypto will be treated as fiat money for GST purposes, backdating the bill to July 1, 2017.
However, in February 2018, the Australian Tax Office said that it considers cryptocurrencies as “property,” meaning that financial profits made from selling cryptocurrencies should be subject to a capital gains tax. The ATO has released a warning in late January that they will be taking “strong action” against those attempting to dodge their tax obligations.
The ATO’s website contains a section on the taxation of cryptocurrencies, specifically Bitcoin, where they said that in their view:
“Bitcoin is neither money nor a foreign currency, and the supply of Bitcoin is not a financial supply for goods and services tax (GST) purposes. Bitcoin is, however, an asset for capital gains tax (CGT) purposes.”
The section adds that there will be no income or GST tax for just paying for goods and services in BTC, as long as the cost totals less than $10,000. On the other hand, a business can be charged GST for goods and services with BTC transactions, and there is the possibility for a CGT to be applied if one “dispose[s]” of BTC as part of their business.
Mark Chapman, H&R Block’s director of tax communications and former senior director at ATO, said that for those involved with cryptocurrencies, it’s best to seek professional tax advice due to the complexity of ATO guidelines, according to news.com.au:
“A lot of people simply aren’t aware of their tax obligations — cryptocurrency is a wild west area with regards to tax — but it’s essential to be aware that there are potential tax obligations surround