Gazette notice: Commissioner of Taxation – Notice of a data-matching program
The Australian Taxation Office (ATO) will acquire account identification and transaction data from cryptocurrency designated service providers for the 2021 financial year through to the 2023 financial year inclusively. The data items include:
■ Client identification details (names, addresses, date of birth, phone numbers, social media account and email addresses)
■ Transaction details (bank account details, wallet addresses, transaction dates, transaction time, transaction type, deposits, withdrawals, transaction quantities and coin type)
We estimate that records relating to approximately 400,000 to 600,000 individuals will be obtained each financial year.
The data will be acquired and matched to ATO systems to identify and treat clients who failed to report a disposal of cryptocurrency in their income tax return. Furthermore, the matching process strengthens our ability to develop tailored treatments for clients who may not be meeting their obligations. These obligations may include registration, lodgment, reporting and payment responsibilities.
The objectives of this program are to:
■ promote voluntary compliance by communicating how we use external data with our own to help encourage taxpayers to comply with their tax and superannuation obligations
■ identify and educate those individuals and businesses that may be failing to meet their registration and/or lodgment obligations and assist them to comply.
■ gain insights from the data that may help to develop and implement treatment strategies to improve voluntary compliance; this may include educational or compliance activities as appropriate.
■ gain insights from the data to increase the ATO’s understanding of the behaviours and compliance profiles of individuals and businesses that have bought, sold or accepted payment via cryptocurrency
■ help ensure that individuals and businesses that trade or accept cryptocurrency as payment are fulfilling their taxation lodgment, reporting and payment obligations.
■ help ensure that individuals and businesses are fulfilling their tax and superannuation reporting obligations.
A document describing this program is available at ato.gov.au/dmprotocols.
This program follows the Office of the Australian Information Commissioner’s Guidelines on data matching in Australian Government administration (2014) (the guidelines). The guidelines include standards for the use of data matching as an administrative tool in a way that:
■ complies with the Australian Privacy Principles (APPs) and the Privacy Act 1988 (Privacy Act)
■ is consistent with good privacy practice.
A full copy of the ATO’s privacy policy can be accessed at ato.gov.au/privacy.
Overview
The Australian Taxation Office (ATO) introduced a data-matching program under the Tax Administration Act 1953 in 2021 to enhance the accuracy and effectiveness of cryptocurrency-related tax reporting. This program, enacted by the Australian Government, was designed to address the growing complexity and prevalence of cryptocurrency transactions that necessitate closer scrutiny to ensure compliance with tax laws. The ATO intends to acquire and match account identification and transaction data from cryptocurrency designated service providers to identify and educate taxpayers who may be failing to meet their obligations, thereby promoting voluntary compliance and improving the understanding of compliance behaviours among cryptocurrency users. The program aims to align with the Office of the Australian Information Commissioner’s Guidelines on data matching, ensuring compliance with the Australian Privacy Principles and the Privacy Act 1988.
Scope and Application
The Commissioner of Taxation, through the Australian Taxation Office (ATO), has announced a data-matching program aimed at cryptocurrency transactions for the financial years 2021 to 2023. This program targets designated service providers who will provide account identification and transaction data, including personal details and specifics of transactions such as dates, amounts, and types. This initiative is expected to affect a substantial number of individuals, approximately between 400,000 and 600,000 per financial year, who have engaged in cryptocurrency transactions. The primary purpose of this data collection is to ensure compliance with tax obligations by identifying individuals and entities that have not reported disposals of cryptocurrency accurately. The program aligns with the Office of the Australian Information Commissioner’s Guidelines on data matching, ensuring compliance with the Australian Privacy Principles and the Privacy Act 1988. It also aims to foster voluntary compliance, educate those who may be neglecting their obligations, and enhance the ATO’s understanding of cryptocurrency-related behaviours and compliance profiles. The scope and reach of this program are national, impacting all individuals and businesses within Australia that deal with cryptocurrency transactions, as they are required to meet their tax and superannuation reporting obligations.
Key Provisions
The key provisions of the legislation (Gazette notice: Commissioner of Taxation – Notice of a data-matching program) pertain to the acquisition of data from cryptocurrency designated service providers by the Australian Taxation Office (ATO) (section 1). The ATO will collect various types of data, including client identification details and transaction information (section 1). This data collection is expected to affect approximately 400,000 to 600,000 individuals annually, spanning the 2021 financial year to the 2023 financial year (section 1). The primary objective of this data-matching program is to identify and assist individuals and businesses that may be failing to meet their tax and cryptocurrency-related obligations (section 1).
The Act imposes specific obligations on the parties involved. Cryptocurrency designated service providers are required to supply the necessary data to the ATO, including personal information and detailed transaction records (section 1). This data will be used to match against ATO systems to identify non-compliance with tax and superannuation obligations (section 1). The ATO, in turn, is obligated to use this data to promote voluntary compliance, educate non-compliant parties, and develop targeted strategies to improve overall compliance (section 1). Furthermore, both the ATO and the service providers must ensure that their data practices comply with the Australian Privacy Principles and the Privacy Act 1988 (section 1).
Any breaches of the obligations set forth in the Act may result in civil or criminal consequences. The penalties for non-compliance can be severe and may include fines and other sanctions as prescribed by relevant laws (section 1). While the exact maximum penalties are not specified in the gazette notice, they are typically determined based on the severity and intent of the breach. For instance, failing to provide required data can attract significant penalties under the Privacy Act and other applicable legislation (section 1). Additionally, the ATO has the authority to take further action against individuals or businesses found to be in breach of their tax obligations, which may include legal proceedings and additional fines (section 1).