Though cryptocurrency is not viewed as a currency by the ATO, its “fraudulent” naming is fuelling its worldwide boom, according to one auditor.
Executive general manager at ASF Audits, Shelley Banton, is finding substantial misinformation about the nature and value of cryptocurrency is compounding its popularity in Australia.
“Why are we continuing to see the relentless pursuit of a volatile, high risk, overheated investment that has no underlying assets or government regulation to support the price?” Ms Banton said.
“Part of the problem is the fraudulent legitimacy of cryptocurrency enmeshed in the use of the word ‘currency,’” she said.
“The ATO has released a guidance paper on cryptocurrency that confirms that BTC in particular is neither money or foreign currency. Any comparison between cryptocurrencies and the dollar, euro or pound is therefore redundant,” she said.
At best, cryptocurrency should be commonly known as a crypto asset, based on how it comes to being.
“One of the best definitions for cryptocurrencies is they are a new asset class that enable decentralised applications. These are electronic ledgers located in a decentralised system that’s continuously updated, open to everyone who uses it and those willing to download it,” Ms Banton said.
“In this sense, they are crypto assets, not cryptocurrencies because they serve a new form of software that allows payments without a trusted central party or bank. The technology that underpins this new software is called the blockchain,” she said.
Cryptocurrency is a key surveillance area for the ATO. The regulator is currently consulting externally in an effort to monitor tax compliance, particularly given many taxpayers are unaware cryptocurrencies with characteristics similar to bitcoin are an asset for capital gains tax (CGT) purposes.