Bitcoin users in ATO sights as use in property transactions set to rise
The Australian Tax Office is warning users of the virtual currency Bitcoin that it can track who is using it following concerns that it could be used to hide transactions and evade paying tax.
Bitcoin is a virtual currency that launched in 2008 with the aim of facilitating online transactions, but concerns have been raised about its volatility and the anonymity it creates between bitcoin payer and payee.
ATO senior assistant commissioner for the cash economy Michael Hardy told The Australian Financial Review it was confident it could track down the identity of bitcoin users saying it was “no more anonymous than physical cash”.
He said the ATO had the experience to deal with the new currency, was monitoring the currency and was confident of catching any misconduct.
Bitcoin is also facing scrutiny from the US Treasury department and US regulator Commodity Futures Trading Commission (CFTC).
While it has yet to be used to purchase property in Australia, it has been used to make payments in relation to property transactions.
Melbourne buyers advocate Secret Agent accepted its first Bitcoin payment in May for services relating to a single-fronted terrace house in Carlton.
The buyer, a web entrepreneur called ‘Cosmo’ paid the Secret Agent 10 bitcoins valued at $130 each at the time for the $1,300 fee for its advice and recommendations.
Secret Agent managing director Paul Osborne said Bitcoin transactions could become much more common, though he is only accepting bitcoin for smaller payments.
"We think it could take off," he said.
This week in the US, a start-up venture Coinsetter will launch as a trading platform for bitcoins potentially allowing larger traders using the web currency.
Regular Property Observer contributor Pete Wargent wrote of the volatility in Bitcoin prices in mid-May illustrating this with a chart:
"Since this chart was produced, over the last weeks, bitcoin prices have been all over the place. From a peak of well over US $200, the price quickly swung to a low of just $105, yet by Wednesday the price had rebounded to $175 before plummeting again to $120 on Thursday," wrote Wargent.
"The extreme volatility caused one major exchange to call a 12 hour halt to trading and has caused skeptics to question whether an item with such wild swings in prices can even be referred to as a 'currency' at all.
"The total supply of bitcoins in circulation today is said to be worth around $1.3 billion. Where that figure will be in 6-12 months time is anybody’s guess."