The days of tax evasion via cryptocurrency trading may be over with the Australian Taxation Office enlisting a team of experts to catch dodgy traders. Yes, maybe we spoke too soon.
The news comes via the Australian Financial Review who today announced that the ATO have been in active consultation with tax experts and lawyers to help identify and track cryptocurrency transactions.
The dedicated team of specialists will co-operate with tax officials to “explore common queries and practical issues” which involves transactions using the digital “distributed” ledgers that have no central data storage, a case which has made it difficult to trace and track in the past.
The report also highlighted that the ATO is working closely with the banks, Austrac and state revenue offices who are responsible for revenue collection on property transactions.
Cryptocurrency spruikers who are also cashing in on the buyer hysteria with inaccurate or misleading information are also in the crosshairs of the task force.
“We are consulting with key stakeholders who have expressed an interest in tax issues relating to cryptocurrencies,” a spokesman for the ATO told the AFR.
“We will discuss common queries and scenarios, practical issues and the tax implications for current and anticipated future developments in relation to cryptocurrencies.”
Bitcoin and other cryptocurrencies are currently unrecognised as money or foreign currency for tax purposes. They instead fall under assets where they can be used to calculate capital gains tax.
Essentially the ATO will be looking at ways of how to tax transactions and identify liabilities in the era of cryptocurrency trading.
As an example outlined by the article:
“A property seller receiving $1 million in cash may have to pay tax on the profit at the end of the tax year based on the sale being completed for $1 million. A seller who receives $1 million in bitcoin that doubles in value from the day the property settlement takes place may have to pay CGT not only on the $1 million property sale, but potentially also on the $1 million gain on the bitcoin if it is later spent or converted to cash.”
Tax specialists have highlighted the fact that customer bank accounts can be mined by the ATO for big ticket transactions which covers property and luxury cars that often leave a cash trail for investigators to follow.