Australian tax office targets 1.2M crypto investors for tax compliance

• Australian Tax Office seeks data from 1.2M crypto users for tax compliance.
• Cryptocurrencies are classified as taxable assets in Australia and capital gains tax applies.
• Global crackdown on crypto tax evasion has intensified, especially in Canada, Türkiye and the US

A step has been taken with the aim of increasing tax compliance crypto market The Australian Taxation Office (ATO) is reportedly seeking data from 1.2 million cryptocurrency exchange users.

Initiative, elaborately a Notice seen by ReutersOutlines the ATO’s efforts to identify individuals who may have neglected their tax obligations related to crypto trading.

ATO is going after tax evaders

The data sought includes a range of personal information such as users’ dates of birth, social media account details and phone numbers, as well as transaction-related details such as wallet addresses, types of coins traded and bank account information.

This comprehensive approach is intended to facilitate the identification of traders who have potentially failed to report their crypto-related income and pay required capital gains tax on profits earned from cryptocurrency transactions.

Unlike other foreign currencies, cryptocurrencies are classified as taxable assets in Australia, making it necessary for individuals engaged in crypto trading to meet their tax obligations.

According to the ATO, the complex and evolving nature of the cryptocurrency landscape often causes challenges in tax compliance awareness. The agency said in its notice that the ease of purchasing crypto assets using false information may attract individuals who want to avoid their tax obligations.

Crypto tax compliance around the world

Australia is not alone in exploring tax compliance in the crypto sector. Around the world, jurisdictions are stepping up efforts to collect unpaid taxes arising from digital asset profits. In Canada, the Canada Revenue Agency (CRA) is reportedly conducting more than 400 audits related to cryptocurrencies and investigating several crypto investors to recover unpaid taxes.

Similarly, Turkey is expected to introduce crypto-related legislation to establish a legal framework for crypto taxes later this year, reflecting the growing recognition of cryptocurrencies in economies around the world.

In the United States, regulatory proposals aim to increase long-term capital gains tax rates, particularly targeting high-income investors. The Biden administration’s federal budget proposal includes a plan for a 44.6% tax on long-term capital gains for individuals earning more than $1 million annually. Additionally, there is a proposal to impose a 25% tax on unrealized gains for ultra-high net worth individuals, although its implementation remains uncertain.

While these regulatory measures indicate a tightening of oversight in the cryptocurrency sector, the extent of their impact on market dynamics and investor behavior remains to be seen.