ATO to crackdown on Australians investing in crypto assets

The Australian Taxation Office (ATO) is collecting bulk records from Australian cryptocurrency designated service providers (DSPs) as part of a data matching program to ensure people trading in cryptocurrency are paying the right amount of tax.

Data to be provided to the ATO will include cryptocurrency purchase and sale information.  

"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. We also use third-party data to assist taxpayers in meeting their tax obligations through pre-filling of tax returns," deputy commissioner Will Day said.

"This data will be collected under notice from the DSPs on an ongoing basis."

There has been significant growth in participation of crypto-assets in recent years. It is estimated that there are between 500,000 to 1 million Australians that have invested in crypto assets.

Cryptocurrency and blockchain technology is seen as an enabler of existing risks for the ATO. It has been used to move funds within the black economy, hide money offshore and is sometimes linked to risks with unexplained wealth and undeclared taxable capital gains.

The ATO announced it would with other regulators, in particular the Australian Transaction Reports and Analysis Centre (AUSTRAC) and the Australian Securities and Investment Commission (ASIC), to ensure that tax law requirements align with a whole of system approach.

"The ATO is also working in a joint international effort as part of the Joint Chiefs of Global Tax Enforcement (J5), aimed at investigating cryptocurrency-related tax evasion and money laundering," Mr Day said. 

Mr Day explained that the ATO wants "taxpayers to get it right", so it will give people the at least 28 days to verify the information it has collected, before any compliance action is undertaken. 

"Where people find that they have made an error or omission in their tax return they should contact the ATO as soon as possible. Penalties may be significantly reduced in circumstances where we are contacted prior to an audit," Mr Day said.

People can correct a mistake by requesting a self-amendment or making a voluntary disclosure, and can also contact the ATO if they need help paying their tax.