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Australia Targets Crypto Tax Fraud in 5 Nation Cyber Sweep

australia, cryptocurrency, tax, bitcoin

The Australian government is in the process of investigating a number of tax avoidance schemes involving cryptocurrency with support from other jurisdictions.

This follows an announcement in April by the Australian Taxation Office (ATO) that it was stepping up its database in order to monitor if the correct taxation is being gathered from cryptocurrency holders across the country. Part of the move will involve collecting information from Australian cryptocurrency designated service providers (DSPs) regarding crypto purchases and sales.

The current investigation is being conducted in tandem with the international J5 tax authorities’ group which includes Britain, Canada, Holland, and the US. The cooperation between the five nations began in 2018 as calls for dealing with cyber-related tax avoidance became a common cause.

The ATO’s Deputy Commissioner Will Day reported that the agency was currently examining 12 cases; one of which was described as a “global financial institution” which enabled taxpayers to be able to hide details which should have been recorded for taxation purposes.

At a global level, there are around 50 investigations on J5 books which involve possible cyber infringements, some including the use of cryptocurrency. Deputy Commissioner Day commented that Australia was cracking down on this kind of evasion:

“At no other time have criminals been at greater risk of being caught… In Australia, they are often intermediaries who are playing a role between the tax evader and an offshore entity.”

In Holland, a cryptocurrency mixer was removed offline by the Dutch tax authorities. Such services provide users anonymity by mixing data that could identify the holder of the currency with other holders, making it hard for authorities to track the user under investigation.

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Australian Taxation Office to Tighten Tracking of Crypto Ownership

The Australian Taxation Office (ATO) is stepping its up its database in order to monitor if the correct taxation is being gathered from cryptocurrency holders across the country.

Part of the move will involve collecting information from Australian cryptocurrency designated service providers (DSPs) regarding crypto purchases and sales.

This follows on from a call for public information in 2018 when the ATO suggested it needed more input regarding its current legislation regarding cryptocurrency tax obligations and lifted the unpopular tax on Bitcoin purchases. This resulted in the tax on goods and services tax (GST) on cryptocurrency purchases being lifted in a bid to promote the growth of Australia’s fintech industry.

ATO Deputy Commissioner Will Day has said that this new extension on data gathering will make up a key element of the ATO’s compliance program, commenting:

“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.”

The ATO added that with between 500,000 to 1 million Australians, the collection of taxes represents some element of risk particularly with “unexplained wealth and undeclared taxable capital gains,” a contributing factor.

The Tax Office says that it is committed to working with Australian Transaction Reports and Analysis Centre (Austrac) and the Australian Securities and Investment Commission (ASIC) in its collection of new data. Under new laws, exchanges are required to identify and verify the identities of their customers, similar to the same procedure followed by banks and other financial institutions.

 

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Australian Tax Regulator Issues Alert on Bitcoin ATM Fraud

Australia is experiencing its own measure of crypto-related fraud where scammers are demanding tax payments through Bitcoin ATMs. To that effect, the Australian Taxation Office (ATO) on 14 November 2018 published a warning to citizens advising them to be cautious of scammers posing as ATO officials.

Compared to previous years, a higher number of scammers are claiming to be associated with the ATO to defraud unsuspecting victims, according to ATO Assistant Commissioner Kath Anderson, who asked Australians to be vigilant for tax scams. She also warned that the ATO will not ask for payments into ATM machines or via gift cards, prepaid cards or direct payments to bank accounts.

Concerns were also voiced by the Assistant Commissioner over the number of citizens sharing personal information – tax file numbers, bank account numbers and dates of birth – with tax scammers, stating that these could increase their susceptibility to fraudulent occurrences. The warning reported that around 6,000 taxpayers have fallen to phishing scams and almost USD 1 million to have been paid to scammers since 1 July 2018.

Payments through cryptocurrency have overtaken iTunes vouchers as the most common method of scam payment. In May, Scamwatch, an Australian consumer watchdog, revealed that Australians had lost around USD 2 million in scams involving cryptocurrencies and initial coin offerings, with about USD 1.2 million lost in Bitcoin scams alone. This was due to the increased popularity of cryptocurrency in the last quarter of 2017 which led to a surge in fake ICOs.

Bitcoin ATMs allow customers to exchange cash for the cryptocurrency, with some also allowing customers to sell the cryptocurrency for cash. However, just last month, the headlines were abuzz with news of fraud after scammers defrauded four Australian Immigrants of more than AUD 50,000 (USD 35,000), by convincing them to deposit money into a Bitcoin ATM or alternatively be arrested for nonexistent debts.

Anderson advised citizens to be wary of scammers demanding payments for debts they aren’t aware they owed, as scammers are growing increasingly sophisticated and exploiting vulnerable people, often using aggressive tactics to swindle them out of their money or personal information.

 

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Bank of Queensland Rules out Crypto Purchases Using Mortgage Equity

The Australian Financial Review has reported that the Bank of Queensland will prohibit its customers to use loan equity to purchase cryptocurrency.

The Bank of Queensland, one of Australia’s largest banks, which is publicly traded on the country’s stock exchange, has made the move as it believes recent crypto price instability has made amendments to its rules necessary. Other banks have discouraged its borrowers using real-estate mortgages for crypto purchases, but as yet haven’t officially prohibited the activity.

The bank has stated in its new rules “any loan purpose that involves the acquisition of or usage of cryptocurrency is unacceptable”.

Australian regulators are increasing scrutiny over crypto space. Austrac, the country’s financial intelligence agency, has announced new rulings which have mandated further customer scrutiny across cryptocurrency exchanges. Added to this, the Australian tax office has sought public feedback regarding crypto earnings.

Also, the ATO reported that it would be enforcing its tax requirements this year by using 100-point checks, a security checking system long favored by the Australian government and other sectors, and also call on bilateral agreements with other countries to identify users for tax payment purposes. There are currently over 40 countries who have such agreements with Australia including the US and the UK.

It’s been reported that some lenders are now monitoring borrowers accounts in order to check if such accounts are being used for cryptocurrency trading. An anonymous broker reportedly claimed, “They (banks) are concerned because the Australian Taxation Office, Treasury, the Reserve Bank of Australia and Austrac are crawling all over it.”

In a similar move, but in this case focusing on customer credit, banks such as JP Morgan Chase, Citi and Bank of America have suggested bans on credit being used to purchase cryptocurrency due to the volatility of the market.

Reserve Bank of Australia (RBA) official Tony Richards in a speech to the Australian Business Economists recently expressed his admiration of Bitcoin but thought it would not be adopted into the country’s mainstream financial system.

 

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Australian Tax Office to Tighten Crypto Tax Collection This Year

The Australian Taxation Office (ATO) is reported to be channeling its attention on taxes owed by cryptocurrency investors this year, according to Cointelegraph.

The Australian Taxation Office is an Australian government statutory agency and the principal revenue collection body for the Australian government.

The ATO will be enforcing its tax requirements this year by using 100 point checks, a security checking system long favored by the Australian government and other sectors, and also call on bilateral agreements with other countries to identify users for tax payment purposes. There are currently over 40 countries who have such agreements with Australia including the US and the UK.

The Tax Office have been described by Liz Russell, a senior tax agent at Etax.com.eu as being on the “warpath” with these new announcements designed to bring Australia’s crypto users in the mainstream taxation orbit in the country, suggesting the ATO will be “doubling down with its data-matching technology to ensure that Australians are paying any taxes owed through cryptocurrency trading.”

Until recently Australia employed an unpopular double taxation system. Regulation of cryptocurrency has been an issue over the past few years. The Australian government now maintains that transacting with Bitcoin is similar to a barter, being neither money nor foreign currency and as such, is not a financial supply for goods and services purposes. The unpopular tax on Bitcoin purchases will now be lifted in July of this year and Australians will no longer have to pay goods and services tax (GST) on cryptocurrency purchases.

Russell suggests that due to recent losses, possibly made through the Bitcoin downturn, investors can balance-sheet gains against losses deducting losses from profits made late in December of 2017 when bitcoin reached its high point. Gains also in include regular profit from non-crypto sources such as property and investments.

The ATO is on the alert regarding the movement of cryptocurrency particularly following a recent scam where fake ATO employees attempted to collect crypto tax payments posing as collectors.

Mark Chapman, director of tax communications H&R Block Australia, confirmed the crypto tax crackdown:

“The ATO is really looking at that [cryptocurrencies] as a big risk area because it’s new and people don’t understand the tax implications.”

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