- The Australian Tax Office could use Chainalysis for in-depth reporting on citizens tax reports
- Chainalysis could be used as the ATO “can’t rely” on users getting their crypto affairs right
- Chainalysis is already used by U.S. government agencies
The Australian Tax Office (ATO) could use a “local flavor” of a tracing solution from blockchain analysis firm Chainalysis in investigation of citizens’ tax reports. The suggestion came from Chainalysis Australia and New Zealand manager Todd Lenfield the day after ATO commissioner Chris Jordan warned that, even though most crypto investors try their best to keep accurate records, it can’t rely on user-submitted data because new crypto investors may not understand their tax reporting obligations. Such tools could therefore be used to check reports that the ATO thinks may have been calculated wrong.
ATO “Can’t Rely” on Taxpayers Getting it Right
Jordan was speaking at the 14th International ATAX Conference on Tax Administration on Tuesday when he stated that “we can’t rely on taxpayers knowing they need to keep records of their investment income and capital gains and disclose it on their tax returns.” This was because, Jordan said, investors may not know that they have to pay tax on crypto-crypto gains as well as gains made when converting crypto to fiat.
He added that the ATO was doing its best to “nudge” users in the right direction such as pre-filling data on tax returns to prompt crypto users to report their investments.
Chainalysis Could Assist in Tracing Crypto
It wasn’t Jordan who mentioned the potential use of Chainalysis however. This was brought up by Chainalysis’ manager in Australia and New Zealand, Todd Lenfield, who told the Australian Financial Review the day after the conference that Chainalysis was hoping to provide key expertise to the ATO and AUSTRAC, the Australian financial police:
We want to have conversations with AUSTRAC about what they are looking to regulate and explain to the tax office the lessons that can be learned from what the IRS is doing. We can take experience we have got in the space, and provide a local flavor.
Chainalysis already works with the U.S. Federal Bureau of Investigation and Internal Revenue Service in the U.S. and is clearly looking to expand its global government portfolio.
