The Australian Taxation Office (ATO), on April 30, 2019, announced that they were collecting trading records from designated service providers (DSPs) to ensure that cryptocurrency traders were presenting accurate income statements and not cutting out on taxes. Therefore, Australians trading in cryptocurrency may soon get a call from the Australian Taxation Office if its new data-matching program flags a problem.
Australia has been a vigilant participant in the cryptocurrency sphere for a long time and has actively tried to prevent crypto traders from evading taxes or using cryptocurrencies for illegal purposes. Cryptocurrencies have provided for an easier mode to store black money offshore, and they are also linked to unexplained earnings of some people, digital assets and blockchain are “seen as an enabler of existing risks for the ATO.” Therefore since 2018, ATO reported had started assembling a task force to monitor cryptocurrency trades and ensure crypto traders paid taxes according to their actual incomes.
The ATO will be collecting bulk records from the Australian cryptocurrency designated service providers (DSPs), with the a government entity kicking off a data-matching program that will see DSPs hand over information on cryptocurrency purchases and sales to aid its investigations.
The ATO uses third party data to improve the integrity of the tax system by identifying taxpayers who fail to disclose their income details correctly. Furthermore, the ATO also uses third-party data to assist taxpayers in meeting their tax obligations through pre-filling of tax returns.
To implement this initiative, the ATO will be working with other regulators as part of the program, in particular the Australian Transaction Reports and Analysis Centre (Austrac) and the Australian Securities and Investment Commission (ASIC), as well as a joint international effort, called the Joint Chiefs of Global Tax Enforcement (J5), that is investigating cryptocurrency-related tax evasion and money laundering.
Source: Australian Tax Office (ATO)
One of TPA’s technology partners Cygnet Infotech has developed a comprehensive VAT solution named R7VAT MTD, which is amongst others recently approved by HMRC for use by companies in the UK to automate and manage their VAT returns filing process but can also be used broadly within the EU.
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