ATO Commissioner Chris Jordan Warns Australian Cryptocurrency Investors On Tax Liabilities and Blockchain Records

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ATO Commissioner Chris Jordan Warns Australian Cryptocurrency Investors On Tax Liabilities and Blockchain Records

The Australian Taxation Office (ATO) says it can no longer rely on taxpayers to navigate the complex world of income tax, capital gains, and blockchain records on their own while first-time investors continue to pour funds into cryptocurrencies.

Australia is a world leader in cryptocurrency adoption, with Finder data suggesting nearly 18% of the population owned a stake in cryptocurrencies like Bitcoin, Ethereum, or Cardano in October, up from 13% in March.

That market hype is expected to continue through to the end of the year. According to a survey by of those who have dabbled in blockchain assets, nearly a quarter of respondents have considered giving crypto-themed gifts this Christmas in an effort to make the technology even more accessible.

But this widespread adoption comes with unique tax obligations, the ATO says, as profits on cryptocurrency investments are liable for capital gains tax (CGT) under Australian law.

During an address at the International Conference on Tax Administration held in Sydney on Tuesday, ATO commissioner Chris Jordan said newcomers struggle to understand these requirements.

“In a sector that is growing rapidly with new investors, we can’t rely on taxpayers knowing they need to keep records of their investment income and capital gains and disclose it on their tax returns,” he said.

Instead, Jordan said the ATO has turned to exchanges and brokers for that data themselves, allowing the government body to pre-fill 89.5 million pieces of data over the 2020-2021 financial year.

“We’ve expanded our data matching protocols to get more data from third parties to assist with emerging investments like cryptocurrency,” Jordan said.

“Acquiring data from sources like cryptocurrency [demand-side platforms], share registries and brokers, and pre-filling this data to prompt clients when they lodge means we raise awareness of their responsibilities when it matters most,” he added.

This kind of system will “allow us to better analyse where someone needs a nudge in the right direction, or a firmer hand”.

ATO has warned for months it will use data to pursue cryptocurrency investors and speculators who fail to meet their CGT obligations.

In May, ATO assistant commissioner Tim Loh said, “We have data-matching protocols [in place] to ensure people who are trading cryptocurrency are paying the right amount of tax.”

And in June, an ATO spokesperson said the organisation is increasingly worried by fresh investors misunderstanding the rules entirely.

“Our main concern is that many taxpayers believe their cryptocurrency gains are tax free or only taxable when the holdings are cashed back into Australian dollars,” the spokesperson said.

Individual tax “performance” still sits at 94%, Jordan said, indicating the vast majority of Australians are across their own responsibilities.

However, Jordan said there is always room for improvement.

“We are working hard to improve the way we collect, manage, share, and use data, but we are just scratching the surface,” he said.

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Chris Munch

Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.