The Australian Tax Office (ATO) has said that it is unable to rely on cryptocurrency investors to keep track of their crypto related transactions and profits, despite most investors trying their best to provide the ATO with the correct information.
“Our main concern is that many taxpayers believe their cryptocurrency gains are tax-free or only taxable when the holdings are cashed back into Australian dollars,” said Chris Jordan the ATO commissioner.
Speaking at the 14th International ATAX Conference on Tax Administration conference on Tuesday 23rd November, ATO commissioner Chris Jordan outlined that a large number of new crypto investors might not entirely understand their required tax reporting obligations.
“In a sector that is growing rapidly with new investors, we can’t rely on taxpayers knowing they need to keep records of their investment income and capital gains and disclose it on their tax returns. Our main concern is that many taxpayers believe their cryptocurrency gains are tax-free or only taxable when the holdings are cashed back into Australian dollars,” said Chris Jordan
Mr. Jordan stressed that the ATO has been working on ways to “nudge” people in the right direction such as pre-filling data on tax returns to prompt crypto users to report their investments.
Chris Jordan also outlined that the ATO has ramped up its trading data matching capacities in 2021 by sourcing information from cryptocurrency demand-side platforms, share registries and brokers.
“We’ve expanded our data matching protocols to get more data from third parties to assist with emerging investments like cryptocurrency. We are working hard to improve the way we collect, manage, share, and use data, but we are just scratching the surface,” said Chris Jordan.
Chris Jordan noted that most people do the right thing” as tax reporting compliance, or the “tax performance” of individuals and small businesses in Australia is high with “little or no intervention” from the ATO at 94 percent and 87 percent, respectively.
The Commonwealth Banks Is Opening Up to Trading Cryptocurrency
In early November, the Commonwealth Bank announced that it plans to allow users of it’s CommBank app to trade cryptocurrencies. This announcement is a game changer for cryptocurrency in Australia, as the Commonwealth Bank is consequently the first of the four major banks to allow their customers to trade cryptocurrencies via their services.
One of the Commonwealth Bank’s major reasons for deciding to allow their customers to trade cryptocurrency is because there is a huge demand for it already as close to 500,000 of their customers are already engaging in trading crypto.
“We believe we can play an important role in crypto to address what’s clearly a growing customer need and provide capability, security and confidence in a crypto trading platform,” says CBA’s chief executive, Matt Comyn.
Before the end of 2021, the Commonwealth Bank invite 2,000 customers to join a pilot program where they will be able to buy, hold, and sell cryptocurrencies through the CBA phone app.
The bank will initially offer 10 of the most popular coins, including Bitcoin and Ethereum.
It is important to note that under the Commonwealth Banks new initiative users won’t be able to do is transfer cryptocurrencies to other people all transactions will involve either buying or selling the coins for real money. This is because crypto transfer is difficult to trace making it attractive to criminals and a nightmare for the bank when it comes to complying with anti-money laundering and counter-terrorism finance laws as this is something banks find extremely difficult to track with regular money transfers.
Instead, all movements in and out of crypto are to take place through the customer’s own accounts, allowing the bank to better keep track of what’s going on.
The Commonwealth Bank’s CEO Matt Comyn told the media that the huge increase in demand for digital currencies from the banks customers creates both challenges and opportunities for the financial services sector, which has seen a significant number of new players and business models innovating in this area.
“We believe we can play an important role in crypto to address what’s clearly a growing customer need and provide capability, security and confidence in a crypto trading platform. In looking at ways that we can support our customers, we have made the strategic decision to form an exclusive partnership in Australia with Gemini, a global leader with strong security and a track-record of serving large institutions. CBA will leverage Gemini’s crypto exchange and custody service and integrate it into the CommBank app,” says Matt Comyn CEO of The Commonwealth Bank.