ATO Seeks Data from Exchanges To Identify Tax Discrepancies

The Australian Taxation Office (ATO) is targeting approximately 1.2 million cryptocurrency-related accounts to tighten the noose on tax discrepancies.

According to Reuters, this step marks an approach by the Australian government to “crackdown on users who may be failing to pay their taxes amid a rising interest in digital tokens.”

ATO’s Scrutiny On Crypto Transactions

The ATO scrutinizes these 1.2 million crypto-related accounts to detect any reported and actual transaction inconsistencies. This includes examining personal data and detailed transaction records from various cryptocurrency exchanges.

Notably, as disclosed, the primary goal of this move is to identify unreported transactions, whether they involve cryptocurrency exchanges or are used for purchasing goods and services.

According to Reuters, cryptocurrencies are treated as assets, not as foreign currency in Australia. This classification means that any profits from selling these digital assets are subject to capital gains tax.

Furthermore, reports indicate that over 800,000 Australian taxpayers have engaged in digital asset transactions in the past three years, with a significant increase observed in 2021.

This surge in crypto activity has prompted the Australian government to adopt a more structured regulatory approach, which, while comprehensive, is less stringent than in other countries like the United States.

Crypto Regulation In Australia

While Australia has recently enforced regulations requiring cryptocurrency exchanges to secure a financial services license, the nation has expressed interest in the digital currency sector.

So far, key financial players, such as Van Eck Associates Corp. and BetaShares Holdings Pty, are gearing up to launch spot exchange-traded funds (ETFs), with the Australian Securities Exchange (ASX) likely to approve these new offerings soon.

Particularly, reports from Bitcoinist indicate that ASX Ltd., which accounts for about 80% of all equity trading in Australia, is expected to approve the first spot of Bitcoin ETFs by 2025.

Notably, the launch of spot Bitcoin ETFs in Australia will significantly impact the region’s $2.3 trillion pension market.

About 25% of the nation’s retirement assets are managed through self-managed superannuation programs, allowing individuals to select their investments. These programs are expected to be key purchasers of the new spot-crypto funds.

Jamie Hannah, the deputy head of investments and capital markets at VanEck Australia, noted that the combination of self-managed super funds, brokers, financial advisers, and platform money creates a sufficiently large market to support the substantial growth of ETFs.

This development signals a promising future for digital asset investments in Australia’s financial landscape.