KPMG Australia launches Crypto Tax Estimator for traders

16 November 2018 Authored by Consultancy.com.au

Understanding tax obligations for Australian crypto-traders has just gotten a whole lot easier thanks to global professional services firm KPMG’s new Crypto Tax Estimator.

The concept originally emanated from a KPMG hackathon in 2016 and has since been built into a fully fledged tool. The app takes into account multiple factors including capital gains tax and the removal of ‘double taxation’ burden from local GST (general goods and services tax).

As cryptocurrencies continue to evolve at a dramatic pace, regulators and governments around the world are attempting to keep pace. Tax obligations are just one of many difficult questions raised when considering blockchain technology, with others including anonymity of transactions, money laundering, the potential to fund terrorism and security of funds.

That being said, there are many uses for blockchain technologies that are having a positive impact on society, with a decentralised public ledger it is easier to prevent corruption and fraud. Cryptocurrencies have also hailed in the new wave of investment funds, allowing more entrepreneurs to access capital at unprecedented rates, decentralising venture capital and shifting from an outdated system.

KPMG Australia launches Crypto Tax Estimator

With such a large list of potential uses and serious risks involved, globally governments have been shocked by the arrival of blockchain technology. At first, governments wanted to kill it off, to ban it outright and one way to do this is through taxation. However, over time the technology evolved to become the talking point of even mum and dad dinner parties, creating a shift of heart.

Blockchain fits into a greater wave of new financial technology or Fintech which is driving growth in Silicone Valley and throughout Greater China. Other smaller destinations – such as Singapore, Hong Kong, Switzerland, Estonia and the Cayman Islands – are competing by relaxing their regulations to foster a culture of innovation and attract start-ups.

Australia as is often the case, has had a wait-and-see approach. That is until the past year or so, when the potential uses and benefits of the technology have shot into the public sphere with the dramatic rise of Bitcoin prices. Although the bubble burst, blockchain itself continued to attract investment and has turned heads in the government who aim to see the Australian economy shift to technology driven.

Innovation has been led by such notable organisations such as the Australian Stock Exchange – who have been listing cryptocurrency exchanges since 2014 and IBM’s partnership with the Commonwealth Scientific and Industrial Research Organisation (CSIRO) to pilot an Australian National Blockchain network.

“Cryptocurrency markets are growing at a rapid rate across the world, and it is important both for the crypto traders and governments that taxation rules and tools evolve to keep up with this fast-emerging area,”
– Laszlo Peter, KPMG

Another large player in the scene is the global management and strategy consulting industry who are partnering with, acquiring, incubating and investing in Fintech startups left, right and centre. Each of the Big Four firms along with BCG and Bain, McKinsey and Accenture are heading up a global push for blockchain innovation. In Australia, KPMG have taken the lead in this regard with their latest invention; Crypto Tax Estimator.

“It is estimated that hundreds of thousands of Australian companies and individuals are trading crypto assets. But in this complex and fast-emerging area, there are few sources of guidance that can help people easily understand the potential tax implications of trading, such as capital gains tax,” said Laszlo Peter, KPMG Australia’s head of blockchain services.

“The possibility of being non-compliant is a major source of legal risk, and we want to provide an easy-to-use tool that may assist participants in the newly emerging token-based economy to understand their tax obligations,” he added.

The intention of the new tool is to open up the the crypto market and make it more attractive for local retailers and institutional investors. This is one of the first that tools that can directly plugin to crypto exchange, Independent Reserve and is lent a high level of legitimacy due to KPMG’s backing. The tool will protect investors and ensure that they comply with Australia’s tax regulations when they trade Bitcoin, Bitcoin Cash, Ethereum, Litecoin and XRP.

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