Australian Tax Office Reveals Ongoing Investigation on Crypto Tax Avoidance

Australia’s tax agency – the Australian Tax Office (ATO) – is currently investigating 12 major international tax avoidance schemes, with a key focus on cryptocurrency-enabled activities. The news was reported by local news outlet on June 6th.

Senior officials from the Australian Criminal Intelligence Commission (ACIC) and Australian Taxation Office (ATO) have met in Washington, DC, this week to mark the one-year anniversary of the formation of the Joint Chiefs of Global Tax Enforcement (J5).

The ATO’s cross-border investigations were officially revealed following a meeting of the J5.

Joining Australian leaders was the Canada Revenue Agency (CRA), the Dutch Fiscal Intelligence and Investigation Service (FIOD), Her Majesty’s Revenue & Customs (HMRC), as well  Internal Revenue Service Criminal Investigation (IRS-CI).

The J5 was formed in July of 2018 to serve as an international taskforce following growing concern over the escalation of tax avoidance, cybercrime and cryptocurrency abuse. The taskforce focuses on tackling cross-national tax crime threats including cybercrime, crypto-currency, and global tax evasion, whilst working on sharing intelligence and data with the other members of the taskforce.

Following today’s announcement, ATO deputy commissioner Will Day has stated that 60 investigations were underway by the J5 members, with Australia directly involved in 12. At least one of those being targeted was a global financial institution and its intermediaries, which are believed to have enabled taxpayers hide assets and income details.

 “We’re seeing the use of cryptocurrencies in ways that we haven’t seen before. At the Australian level, there is definitely legitimate use for investment in cryptocurrencies, but we’re also seeing the use of them to facilitate tax crimes.”

He further added that there was clear evidence of people based in Australia who were facilitating the avoidance of tax or partnering with others in overseas jurisdictions in criminal activity.

“At no other time have criminals been at greater risk of being caught,” Day said. “In Australia, they are often intermediaries who are playing a role between the tax evader and an offshore entity.”

The J5’s cooperation has enabled more organized and intensive data exchange and analysis across borders. Most recently, it has been reported that Dutch tax authorities took out a crypto mixer due to the combined efforts of the J5 members.

As previously reported, the ATO has disclosed that it is seeking to contact crypto traders personally about tax issues as part of a new data collection scheme. Together with the Australian Securities and Investment Commission and the Australian Transaction Reports and Analysis Centre, the agency is trying to identify crypto traders using data sourced from domestic cryptocurrency exchanges.

Cases involving money laundering, the smuggling of illicit commodities, personal tax frauds and evasion are also being collaborated on, and there have already been more data exchanged in the past year than the previous 10 years combined between J5 partner agencies.

The taskforce focuses on using platforms that enable each country to share information in an organized manner, without needing to surrender data or control to a central database. As a result of its leadership in this space, the J5 are making it harder for people to dodge taxes by hiding their money abroad.