KPMG Australia (KPMG) welcomes the opportunity to provide a submission to the Board of Taxation’s Review of the Tax Treatment of Digital Assets and Transactions (the review).

As the Board of Taxation’s consultation paper states, the creation, trade and use of crypto assets is in an ongoing state of evolution, and it is important to ensure that the tax framework remains appropriate. KPMG is supportive of additional regulation in Australia to support investor confidence and provide certainty, which in turn will ensure that Australia retains its competitiveness and ability to attract investment.  

Specifically, we consider that the tax treatment of crypto assets should not be left to existing ordinary tax principles. Instead, either a specific statutory regime, or some other statutory framework should be legislated to provide clarity and ensure tax outcomes are appropriate. These new rules should be based on the characterisation of digital assets, with alignment to the token mapping classification being undertaken by the Government.

The guidance provided by the Australian Tax Office (ATO) to date has been insufficient, primarily due to uncertainty in the application of existing law and a lack of resources at the ATO with the technical expertise needed to keep up with the rapidly changing digital asset economy. In our view, the reliance on ATO website guidance is not conducive to taxpayer compliance and does not give certainty of tax outcomes. Therefore, our view is that the ATO must be sufficiently resourced to be able to provide further guidance to taxpayers and tax advisors in the form of binding rulings.

Lastly, as noted above, the evolving nature and high degree of rapid change in the digital asset economy will require continual revision to ensure Australia’s tax regime can correctly accommodate each evolution. As such, Treasury, the ATO and the Board of Taxation should consider establishing a form of ongoing consultation with taxpayers and tax practitioners in order to stay abreast of changes as they emerge. 

If you would like to discuss the contents of this submission further, please do not hesitate to reach out.

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