The ATO (Australian Tax Office) is tightening up in attempts to close loopholes in investments in cryptocurrencies like bitcoin.
Cryptocurrency will be one area going under close attention, alongside work expenses and incorrect claims.
Mark Chapman, H&R Block’s director of tax communications told reporters that these were areas that had seen “systemic abuse”, costing the budget over $2.5b a year.
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The authorities state that they will use 100-point identification checks to implement data-matching techniques in order to investigate cryptocurrency investors. The subject is a “murky area”, with many unaware of current regulations. Chapman said:
“A lot of people simply aren’t aware of their tax obligations — cryptocurrency is a wild west area with regards to tax — but it’s essential to be aware that there are potential tax obligations surrounding capital gains and income tax, depending on if you are investing or trading”
The ATO provided guidance regarding the issue earlier this year. The document outlines that whilst cryptocurrency (specifically Bitcoin) is not seen as money or foreign currency, it is viewed as an asset subject to capital gains tax.
There has been a range of cryptocurrency developments in Australia recently. Earlier this month the bank CBA was among those who banned the purchase of cryptocurrencies with credit cards. However, the news has not all been negative – in January Brisbane airport became the world’s first to accept cryptocurrencies for retail and services.
Australia might not be alone in moving to tighten control of cryptocurrency taxes. A recent report found that 0.04% of US cryptocurrency users are paying taxes. Of the 250,000 Americans studied over 57% admitted knowing taxes were applicable to their crypto transactions.
With statistics like these beginning to appear, we may see authorities around the world look to tighten tax control.
Featured image from Shutterstock.