The good old days of buying and acquiring cryptocurrency without having to worry about government intervention have come to an end. This is the case in Australia, where cryptocurrency investors will likely soon receive a letter from the Australian Taxation Office (ATO) informing them that they owe back taxes on digital currency that they have acquired, that is if they have not paid their taxes already.
According to an official statement from the ATO, the agency will now be collecting bulk records from those service providers and exchanges who have been designated by the Australian government to provide such transactions. These records will be acquired to ensure that those trading in cryptocurrency have been paying the proper amount of tax. This includes not only the purchase of cryptocurrency but also sales information.
The purpose of this new action is not surprising at all. Government agencies are always looking for a way to ensure that they are getting the maximum amount of revenue through taxation, and there is a growing concern that those dealing in digital currencies have not been declaring all of the cryptocurrency they have acquired or sold.
According to Deputy Commissioner Will Day, the strategy to acquire these records to ensure people are paying their taxes is quite simple:
“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. This data will be collected under notice from the DSPs on an ongoing basis.”
Australia has been at the forefront of taxation on cryptocurrencies. Laws have been in place for a few years now enabling the government to be able to collect taxes on digital currencies. Those laws even had to be altered a couple of years ago when it was discovered that they were double taxing those involved in the sale and trade of cryptocurrencies.
The country has even gone as far as to promote and invest in blockchain technology to help protect the transactions from hackers. There has been no doubt that the government of Australia has been quite amenable to the idea of its citizens purchasing and trading digital currencies, they just want those people to report what they have sold or purchased so that the proper taxes can be levied.
According to the report, as many as 1 million Australians have invested in cryptocurrencies, yet it is believed that only a portion of those have actually paid their taxes.
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