Australia: Crypto exchanges are required to provide personal data for up to 1.2 million accounts

ATO first disclosed its cryptocurrency data matching program in April, aimed at assisting in tracking down traders who have not reported their cryptocurrency transactions . On May 7, according to Australian Reuters, the Australian Taxation Office (ATO) sent a notice to cryptocurrency exchanges last month, requiring cryptocurrency exchanges to provide personal data and transaction details for up to 1.2 million accounts.

·ATO uses external and internal data to promote tax compliance and combat those who try to evade their tax obligations. Ensuring that relevant traders comply with the capital gains tax obligations of cryptocurrency transactions.

·This initiative is part of a greater effort to intensify scrutiny following the collapse of FTX, including prosecuting illegal token sales and considering issuing new licenses to cryptocurrency exchanges.

·ATO has expanded its tax regulatory scope, reflecting Australia's commitment to adjusting regulatory measures to adapt to the evolving cryptocurrency landscape.

1 Main content

The Data Match Program, which targets individuals who inaccurately report cryptocurrency-related income to evade tax liability, strengthens the cryptocurrency industry's tax compliance and is a comprehensive crypto tax crackdown initiated by the ATO, requiring up to 1.2 million crypto exchange accounts to provide their personal and transaction data.

The ATO requires cryptocurrency exchanges to provide personal information and transaction details such as names, addresses, birthdays, and personal data including dates of birth, phone numbers, social media accounts, and transaction details such as bank accounts, wallet addresses, and token types to help them audit compliance with their obligations to pay capital gains tax on sales. This data will help identify traders who do not report their cryptocurrency-related activities, including cryptoasset exchange activities when selling cryptoassets for currency or using them to pay for goods and services.

In addition, there are penalties in which the ATO will prosecute entities that sell tokens without the proper licenses and work with banking partners to block payments to cryptocurrency exchanges. In addition to this, the ATO is currently considering a new licensing framework for cryptocurrency exchanges.

2. Why implement data matching program?

The complexity of the cryptocurrency industry may lead to a lack of real understanding of tax obligations, and the ability to purchase cryptocurrencies with false information may make them attractive to those who are trying to evade tax obligations.

ATO can gain insight into the tax implications of cryptocurrency transactions and develop appropriate regulatory responses by obtaining relevant data on cryptocurrency transactions. Meanwhile, the cryptocurrency data matching program will enable the ATO to more clearly identify and address a range of tax risks:

·Missing or incorrectly reporting capital gains tax (CGT) - if cryptocurrency is purchased as an investment, investors need to pay tax on any capital gains they make when disposing of the cryptocurrency:

·Selling cryptocurrency for fiat currency

·Exchanging one cryptocurrency for another

·Gifting cryptocurrency

·Trading cryptocurrency

·Using cryptocurrency to pay for goods or services

·Missing or incorrect income reporting - in some cases, cryptocurrency transactions may also generate ordinary income. Taxpayers who trade cryptocurrency or businesses that accept cryptocurrency as payment are required to report the income generated on their tax returns.

·Missing or incorrectly reporting goods and services tax (GST) - In some cases, crypto transactions may incur GST. GST-registered businesses that accept crypto-assets as payment are required to make a GST description of their supplies and declare these in their statement of business activity. Some supplies provided by certain cryptocurrency intermediaries may be subject to GST and may require registration for GST.

·Missing or incorrectly reporting fringe benefits tax (FBT) - when employees receive cryptocurrency as compensation under a salary sacrifice arrangement, the payment of cryptocurrency is a fringe benefit.

As cryptocurrencies become increasingly popular in Australia, it is essential for the ATO to obtain personal information and transaction details of cryptocurrency transactions to reduce the loss of tax revenue in the cryptocurrency field.

3 Policy Evaluation

This policy is part of a strategy to ensure compliance with capital gains tax obligations related to cryptocurrency transactions. It can promote tax compliance, maintain the integrity of the tax system. At the same time, it can strengthen the supervision of the cryptocurrency field, enhance transparency and accountability in the field. ATO's new data matching program directly addresses the under-reporting or inaccurate reporting of capital gains tax, income tax, goods and services tax (GST), and fringe benefits tax (FBT) related to cryptocurrency transactions.

This policy will provide the ATO with precise information on the activities of cryptocurrency traders, allowing it to crack down on cryptocurrency traders who attempt to evade taxes and curb tax evasion to ensure a fair competition environment for all taxpayers.

However, ATO's strict requirements may cause concern among cryptocurrency investors and exchanges. The demand for such extensive data not only raises privacy issues but also imposes a heavy compliance burden on exchanges. Moreover, the possibility of punishment for violations adds another layer of concern for individual traders and platforms; But it also represents Australia's efforts to maintain tax fairness by leveraging data analytics and technological advancements.