Up to a million Australians are thought to have invested in cryptocurrencies such as bitcoin (Justin TALLIS)

Sydney (AFP) – Australia’s tax authority is stepping up its effort to police the use of cryptocurrencies, fearing many investments and gains are not correctly declared. 

The Australian Taxation Office is to begin monitoring transaction data from selected crypto providers in a bid to weed out evasion, Deputy Commissioner Will Day told AFP Wednesday. 

“This is the first time the ATO has used its formal information gathering powers to obtain bulk customer and transaction data on cryptocurrency from a number of designated service providers,” he said. 

Between 500,000 and a million Australians are believed to have invested in crypto-assets such as bitcoin. 

Authorities around the world have long been concerned about the use of cryptocurrencies for illegal transactions linked to drug trafficking, terrorism and money laundering. 

But as investing in such assets has become more mainstream, governments have also focused efforts on getting their fair slice for the public purse. 

According to data provider CoinMarketCap there are more than 2,000 cryptocurrencies in existence, with Wall Street banks and traditional financial firms getting in on the act. 

In the United States, the Internal Revenue Service has issued limited guidance on the tax implications of investing in virtual currencies, but enforcement remains a work in progress. 

Day said the data would tell the Australian authorities about purchases, sales and ultimately verify whether capital gains tax and other taxes are correctly declared.

The providers were selected to “ensure we have good coverage of the cryptocurrency market”, said Day.

“The data will be collected on an ongoing basis and we will continue to expand the number of providers from which we will acquire data from over time.” 

Day added “it is difficult to measure the full extent of compliance behaviour” or how much money would be recouped. 

“Cryptocurrency activity is not a specific label on the tax return and is included in labels that relate to capital gains tax, amongst others, depending on the nature of the activity.” 

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.