Part of a data matching program aimed at ensuring that people dealing in cryptocurrency pay the right amount of tax.
The Australian Tax Office (ATO) will now supervise the digital currency held by Australians, with the main idea of ensuring that people who own cryptocurrency pay the right amount of tax.
The ATO collects bulk records from Austrian designated service providers (DSPs) in cryptocurrency, and the government agency launches a data matching program to see DSPs pass the information on cryptocurrency purchases and sales to support their investigations.
“The ATO utilizes information from third parties to improve the integrity of the tax system by identifying taxpayers who do not correctly disclose their revenues. We also use data from third parties to help taxpayers meet their tax obligations by filling out tax returns,” Deputy Commissioner Will Day stated.
“These data are collected on an ongoing basis under notice from the DSPs.”
The ATO estimates that between 500,000 and 1,000,000 Australians have invested in crypto assets.
“An enabler of existing ATO risks is cryptocurrency and blockchain technology,” says the ATO in a statement.
The ATO will work with others regulatory agencies, in particular Australian Transaction Reports and Analytic Center (Austrac) and the Australian Securities and Investment Commission (ASIC), as part of the program “Chrypto-monnaie is used to move funds in the black economy, hide money offshore, and sometimes to risk with unexplained wealth and undeclared taxable capital gains.”
The ATO also forms part of a joint international effort, called the Joint Chiefs of Global Tax Enforcement (J5), to investigate the tax evasion and money laundering related to crypto-currency.
With Centrelink’s “Robo-debt” emphasizing how government data matching initiatives can go wrong, the ATO said it would allow individuals contacted by the ATO to check the information they have before compliance is underway.
While the ATO has recently gained transparency in terms of what cryptocurrency taxpayers own, Austrac was given legislative approval in December 2017, following the approval of the 2017 Anti-Money and Counter-terrorism Financing Amendment No, to monitor digital currency for anti-money laundering purposes.
Under the amended law, digital currency exchange providers must register with Austrac and register in the government agency’s Digital Currency Exchange Register.
Exchanges must maintain a program for identifying, mitigating and managing money laundering and terrorist risk financing. Similar to a bank, the exchange also has to recognize and verify its clients ‘ identities and report to Austrac suspicious issues, international transactions and transactions involving physical currency exceedingAU$10,000.
They are also required to maintain certain transaction records, customer identification, and program information for seven years.
The amendments to the legislation also mean that the digital currency and exchanges held on are treated in-line with physical cash kept in a bank for the purpose of investigating money laundering and terrorism.
The Government follows on from July 1st, 2017, in order to promote the growth of the fintech industry in Australia, the GST treatment of digital currency, including Bitcoin, with regular money.