Speaking to Accountants Daily, HLB Mann Judd partner Peter Bembrick said the injection of $318.5 million to the ATO to tackle the black economy, as announced in the budget papers, would likely see a flow on effect to audits around cryptocurrency due to its surge in popularity over the past 12 months.
“It's a bit like the black economy or the cash economy – this could be another aspect of that and there may be certain taxpayers who are being targeted,” said Mr Bembrick.
“It has a reputation of being a black mark and a criminal element to it but it is now more mainstream and you're going to see people do legitimate transactions … and this could be part of a broader risk analysis by the ATO.”
New register requirements for digital currency exchange providers introduced last month are also a clear direction of the government’s broader plan to close out any tax loopholes related to cryptocurrency.
CPA Australia’s head of policy, Paul Drum, earlier predicted that accountants would have to watch out for an increase in audit activity as they start to deal with clients with cryptocurrency profits for the first time.
“There could be more money and more activity for audits of cryptocurrency traders and many accountants might be facing clients with cryptocurrency profits for the first time, so watch out for any activity because more money going into cryptocurrency audits translates into business advisory work,” said Mr Drum.
“[Many accountants] are not across cryptocurrency trading and the tax implications of that and many of them might have clients that are doing that but they are not even aware of it yet because it's only the last 12 months that cryptocurrency trading profits really came to the fore.”
However, Mr Bembrick believes the ATO needs to update its guidance to help give practitioners greater certainty as they head into tax time.
“I expect we'll hear a lot more from the ATO as we go on but it is interesting that at this stage all that's been talked about are guidelines that are a couple of years old,” he said.
“They've got people consulting and looking at it but they haven't come out with anything too detailed at this stage.
“These guidelines have been around for a while now but most people are only thinking and hearing about this now in the last six to 12 months.”
Jotham Lian is the news editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
With a focus on breaking news and exclusive analysis, Jotham keeps Accountants Daily readers up to date with company moves, tax updates and essential business and client strategy.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.