Anyone trading in cryptocurrency is a potential target of the ATO as it seeks to verify data matching information through the use of third-party sources as part of its ongoing compliance program.

Given the increasing usage and limited regulation of cryptocurrency, the ATO is working in tandem
with the Australian Transaction Reports and Analysis Centre, ASIC, and Designated Service Providers to implement a data matching protocol, matching external data with the data held by the ATO.

The third-party data provided to the ATO will include cryptocurrency purchase and sale information.
The ATO is of the view that taxpayers who undertake cryptocurrency mining are carrying on a business, and profit or loss is assessable on deductions.

Alternatively, as a form of property, taxpayers may be subject to capital gains tax on the disposal of cryptocurrency. As such, the data matching program will help the ATO identify taxpayers who fail to disclose income details correctly. Taxpayers may be contacted by the ATO and given 28 days to clarify information obtained from the data provider.

The data matching protocol continues to retrieve greater knowledge and give regulators a better understanding of the black economy. The program helps identify serious fraud and evasion, as well as terrorism related money transfers, which have arisen due to the difficulty of tracking cryptocurrency transactions.