Australian Taxation Office

• This year's iteration of the Challenge focused on data mining and financial reporting relating to crypto-assets and technology enabled financial threats.
• This is the first Challenge where Financial Intelligence Units (FIUs) from each J5 country participated.
• Collectively, the J5 member countries, FIUs, and blockchain analysis companies scoured their respective data holdings to identify the most promising cryptocurrency leads related to tax evasion and money laundering.
• The J5 works together to gather information, share intelligence and conduct coordinated operations against transnational financial crimes.

• An extensive federal government crackdown on misconduct will increase maximum penalties for advisers and firms promoting tax exploitation schemes from the present $7.8 million to more than $780 million.
• The time limit for the Tax Office to bring court action on promoter penalties will be increased from four to six years.
• It described its initiatives, involving multiple ministers, as the “biggest crackdown on tax adviser misconduct in Australian history”.
• They will enable the Tax Office and the Tax Practitioners Board to refer ethical misconduct by advisers to professional associations for disciplinary action.

• Though the statistics are inexact, some surveys suggest as many as 21% of Australian adults now own crypto assets (and that a further 8% have owned them in the past).
• If you managed to make gains in the past year, you may need to pay extra tax.
• This isn’t based just on when you convert your crypto assets into Australian dollars.

How the tax office treats crypto assets

• The Australian Tax Office treats cryptocurrency holdings like other investment assets, such as company shares or real estate.
• But for individuals – “mum and dad” investors – the key point is that capital gains tax is effectively the same as income tax.
• A capital gain is added to your assessable income, and therefore to the income tax you owe.

How do I record my gains (or losses)

• The big exception to this is if you use cryptocurrency as actual currency, to buy goods for personal use – such as a meal, concert ticket or white goods for your home.
• If you use crypto to buy a personal use asset for less than A$10,000, you can usually disregard the capital gain.
• The longer you’ve held crypto, the more likely the tax office is to regard it as an investment, and deny the exemption.

Calculating the capital gain

• That transaction wouldn’t have involved Australian dollars – but the tax office still expects you to report the capital gain as if it had.
• So what was the capital gain on that hypothetical transaction?

Do I pay tax on all my capital gain?

• For any asset held longer than 12 months, you only have to pay tax on half the capital gain – what the tax office describes as a 50% discount.
• You input this information into the tax return by answering key questions set out in Question 18 of the individual tax return.

Can crypto tax software help?

• These are particularly useful if you transact often, or have a number of crypto wallets.
• But you will still need to double-check the results before relying on them to complete your tax return.
• You may need to add information manually – and it is your responsibility to ensure you are reporting to the tax office correctly.

What if I don’t declare?

• The tax office has ways to match data from sources such as digital exchanges to identify possible tax evasion.
• It is not intended as professional, legal or tax advice, for this you should consult a suitably qualified accountant or other professional.
• The tax law and Australian Tax Office position is subject to both prospective and retrospective changes.

• The PwC scandal, involving the use of confidential government information for financial gain, would seem an ideal probe for the NACC to cut its teeth on.
• At its heart, the PwC affair is simple, a stark example of improper behaviour by a firm taken into the government’s confidence.
• PwC was consulted by the Abbott government on its planned tax avoidance legislation and was privy to confidential information.
• It then used the knowledge obtained in discussions with Treasury to tell clients how to avoid the crackdown.
• In her open “mea culpa” letter this week, Kristin Stubbins, the acting chief executive of PwC Australia, listed three ways the company had “failed”.
• Read more:
  PwC scandal shows consultants, like church officials, are best kept out of state affairs

  Notably, the Coalition has not shown great interest in pursuing the PwC affair.

• Whether or not the NACC takes up the PwC case, what’s happened there reinforces the argument for the anti-corruption body.