The Australian Tax Office (ATO) is planning to institute a task force that shall monitor cryptocurrencies trades to ensure the right amount of tax is being paid on crypto profits. The report came from the Australian Financial Review.
Due to the lack of regulations, early bitcoin adopters have made a handsome profit on their investments. However, now as the authorities tighten its grasp on crypto traders, the cryptocurrency loophole for investors to evade tax may come to an end sooner.
“We are consulting with key stakeholders who have expressed an interest in tax issues relating to cryptocurrencies. We will discuss common queries and scenarios, practical issues and the tax implications for current and anticipated future developments in relation to cryptocurrencies,” said the ATO spokesperson.
ATO to Establish Task Force
ATO plans to enlist a team of specialist across fields of technology, banking and finance and tax law to develop strategies to catch tax evaders. The team aims to monitor gains from investment in virtual currencies.
The team will work with tax officials to track cryptocurrency transactions, which is somewhat difficult to trace due to its decentralized nature. The boom in cryptocurrency space over the past 12 months have worried several governments around the world. The crypto market is one such space where the government has no direct control over it. In recent time, the crypto market had proved to favorable for tax evaders.
At present, cryptocurrencies are not identified as money but as assets to evaluate capital gains tax. According to the report, the first meeting of ATO and industry experts is to take place in February. The main aim of the task force is to ensure crypto traders pay their fair share of taxes. Also, it plans to track money trails that streams in and out of crypto space.
Crypto market: A Tax Haven no more
Government around the world are stepping up their game to overcome money laundering and tax evasion that mainly occurs under the crypto umbrella. Recently, South Korean inspected six banks to ensure all cryptocurrency-linked transactions comply with the country’s tax regulations.
ATO and Australian Transaction Reports and Analysis Centre (AUSTRAC) have been jointly working with Australian banks to pinpoint cryptocurrency transactions. Additionally, tax experts underline that ATO could mine bank accounts that have big transactions listed on their account.
Philip Lowe, Governor of Reserve Bank of Australia, pointed at the use of cryptocurrencies for illegal activities. In December 2017, he said:
“When thought of purely as a payment instrument, it seems more likely to be attractive to those who want to make transactions in the black or illegal economy, rather than everyday transactions.”
Moreover, Australia, which has favored virtual currencies and its underpinning blockchain technology, now seems to tighten regulations for the crypto space. The regulatory framework for virtual currencies is a concerning question to be answered in the coming months.
Will Australia sweep the crypto space with stricter regulations?