In a statement at the 14th international ATAX Conference on Tax Administration, the Australian Tax Office (ATO) stated that it couldn’t depend on crypto investors to monitor their products and transactions.
Australians do not know about cryptocurrency taxes
According to Chris Jordan, the ATO commissioner, new crypto investors often have difficulty understanding tax reporting obligations. Unfortunately, the fast-growing market is full of new investors. The ATO cannot rely on these investors to know when to record their capital gains and investment income, thus disclosing it in their tax returns.
Jordan adds that many new crypto investors think their profits can only be taxed when converting them into Australian currency. For this reason, the ATO has been trying to come up with a way to eliminate this misinformation.
One technique they use is to pre-fill information on a tax return, so crypto users know to report their investments. It has also enhanced its trade data matching capabilities through gathering information from brokers, share registries, and cryptocurrency demand-side platforms. While the ATO is trying its best to improve data collection, sharing, management, and collection, they are not getting far.
Fortunately, Jordan noted that Australians are trying their best as tax performance or tax reporting compliance is high among small businesses and individuals, eliminating the need for the ATO to intervene constantly. The compliance in Australia is at 94%, while tax performance is at 87%.
Chainalysis offers to assist the ATO
Chainalysis country manager for New Zealand and Australia, Todd Leinfield, said that his firm is willing to give its expertise to ATO and the Australian Transaction Reports Analysis Center (AUSTRAC).
Leinfield said that they could discuss AUSTRAC on what it wants to regulate and help them draw assistance from how the IRS works. Their experience in the sector could help AUSTRAC develop a plan that meets the country’s needs.
Chainalysis, a partner of the Commonwealth Bank of Australia, specializes in analysis blockchain for the internal Revenue Service (IRS) and the U.S Federal Bureau of Investigation (FBI). The firm also investigated Suex OTC, a Russian crypto business. The U.S Treasury Department targeted Suex OTC for facilitating ransomware transactions in September.