ATO Tightens Grip: Crypto Tax Crackdown Targets 1.2 Million Users

The Australian Taxation Office (ATO) is reportedly tightening its scrutiny on cryptocurrency traders, aiming to access personal data and transaction details from approximately 1.2 million users of cryptocurrency exchanges.

This move is part of a broader effort to ensure compliance with crypto tax obligations. According to a recent notice by the ATO, this data collection will aid in identifying traders who might have neglected to report and pay taxes on their cryptocurrency transactions.

If you use crypto assets in carrying on your business, find out what you need to know @ https://t.co/BD0yw2Kz7E

— ato.gov.au (@ato_gov_au) April 8, 2024

Cryptocurrencies Classified as Taxable Assets in Australia

Under Australian regulations, unlike other foreign currencies, cryptocurrencies are considered taxable assets. This classification obligates traders to pay capital gains tax on profits realized from the sale of these digital assets. The heightened focus on tax collection coincides with a robust period in the crypto market; Bitcoin has seen a 44% increase since the start of the year, while Ether has appreciated by 32%. Furthermore, the market capitalization for major altcoins, excluding Bitcoin and Ether, has surged by over 27%, as per data from TradingView.

The ATO’s approach includes collecting extensive personal information such as users’ dates of birth, social media profiles, phone numbers, and even details about their banking and cryptocurrency transactions, including wallet addresses and the types of coins traded. This comprehensive data gathering aims to mitigate the risk of tax evasion, which is facilitated by the ability of individuals to use false information to purchase crypto assets, as highlighted in the ATO’s notice.

Global Trend: Tax Authorities Target Crypto Gains

Meanwhile, the focus on securing crypto taxes is not unique to Australia. Globally, there is a burgeoning movement among tax authorities to capture taxes on digital asset gains. For instance, the Canada Revenue Agency (CRA) is actively conducting over 400 crypto-related audits and investigating numerous investors, targeting about $39.5 million in suspected unpaid taxes for the fiscal year 2023-2024. These efforts were confirmed by Sahil Behal, the director general of CRA’s compliance branch, in a report by the National Post on May 6.

In addition to Canada, Turkey is preparing to establish a legal framework for crypto taxes later this year through new legislation. This move is significant given Turkey’s prominent role in the crypto economy. Similarly, in the United States, there are proposals to increase the long-term capital gains tax rate to 44.6% for investors whose earnings exceed $1 million annually. The same proposals from the Biden administration aim to impose a 25% tax on unrealized gains for ultra-high-net-worth individuals.

These international efforts reflect a growing consensus among regulators to tighten fiscal policies surrounding cryptocurrencies as their financial and economic significance continues to expand globally.

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