The Australian Taxation Office (ATO) is establishing a taskforce to monitor cryptocurrency transactions, according to a report in The Australian Financial Review. The taskforce aims to ensure cryptocurrency investors are paying the correct amount of tax.
A team of specialists across tax law, technology, banking and finance will devise strategies to follow the money on gains made from investment in digital currency.
“We are consulting with key stakeholders who have expressed an interest in tax issues relating to cryptocurrencies,” a spokesman for the ATO said.
“We will discuss common queries and scenarios, practical issues and the tax implications for current and anticipated future developments in relation to cryptocurrencies.”
Bitcoin is trading lower today, falling below $US14,000 on the composite index this morning (AEDT) tracked by Coindesk.com, after climbing above $US15,000 overnight.
Australian banks — still battered and bruised over extensive money-laundering revealed last year — are also believed to working with the ATO and Austrac, to assist in tracking money flows stemming from cryptocurrency investments.
Bank customer accounts can be mined by the ATO for large transactions made or received, as tax authorities establish ways to follow the money trail.
At the end of last year, some cryptocurrency investors said Australian banks were freezing their accounts and banning transfers to cryptocurrency exchanges.
Regulatory risk is one of the main question marks hanging over cryptocurrencies in 2018 as more money flows into the market.
In addition to increased oversight from tax authorities and banks, corporate watchdogs — such as ASIC in Australia — are also establishing stricter guidelines for how cryptocurrencies will need to comply with corporate law.
In addition to following the money trail, the ATO is also seeking advice on how they will tax cryptocurrency transactions and determine tax liabilities, a tax specialist told the AFR.
Currently, the ATO does not recognise bitcoin and other cryptos as money or foreign currency for tax purposes. Instead, they are assessed as assets for the purpose of calculating capital gains tax.
Tax specialists are receiving an increasing number of queries about the tax implications of cryptocurrency investments.
The first meeting of the ATO and various industry experts is expected to take place next month.