February 28, 2018 8:18 PM
With a new investor identification framework to be set in place, AUSTRAC and the ATO are gearing up to scrutinize investors in crypto.
On February 28, 2018, it was reported that the Australian Tax Office (ATO) will seek out bitcoin investors with outstanding tax liabilities.
ATO deputy commissioner Will Day said “increased transparency” will result from forthcoming AML measures that will grant the tax office increased probing powers next month. The measures will provide oversight of the cryptocurrency market and will include compulsory 100-point identification checks for cryptocurrency traders.
Currently, the ATO considers bitcoin to be an asset rather than money.
The new rules will also extend the jurisdiction of AUSTRAC, Australia’s financial intelligence agency, enabling it to access cryptocurrency exchange records. In addition to following KYC and AML rules, exchanges will be expected to divulge transactions deemed suspicious, as well as any cash transaction in excess of 10,000 Australian dollars.
Paul Drum, who is a member of the National Tax Liaison Group and CPA Australia chief, explained that many traders are curious whether bitcoin investments are exempt from capital gains tax personal asset rules. “This is going to be a question asked time and again by cryptocurrency traders, and it will come down to the facts of each individual case,” said Drum.
According to the ATO, certain criteria provides exemptions from tax liabilities pertaining to bitcoin use: “Where you use bitcoin to purchase goods or services for personal use or consumption, any capital gain or loss from disposal of the bitcoin will be disregarded (as a personal use asset) provided the cost of the bitcoin is $10,000 or less.”
Drum called the ATO’s move “a watershed moment for the ATO and Austrac, enabling them to access and thoroughly review cryptocurrency exchange account data for the first time.”
The esteemed accountant went on to say:
“The effectiveness of the anonymity of Bitcoin and other cryptocurrencies is starting to fade. These coming changes mean that people shouldn’t assume they can hide forever behind blockchain technology, nor should they assume there are no tax consequences.”
Clear tax policies have been a subject of bewilderment for Australian traders who have been wondering about the tax implications of their investments, some of which have ballooned in value. With the ATO’s intentions clearly laid out, it may behoove these investors to consult professional tax advisors on what will be expected of them.
Jeremy Nation is a writer living in Los Angeles with interests in technology, human rights, and cuisine. He is a full time staff writer for ETHNews and holds value in Ether.
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Source: ETHNews