Taxes on cryptocurrencies like Bitcoin in Australia?

Other than most countries, Australian authorities have issued several informational documents on the treatment of crypto assets and initial coin offerings. The Australian Securities and Investments Commission (ASIC) and Australia’s government financial intelligence agency (AUSTRAC) published guidlines for the taxation of cryptocurrencies, the regulations of ICOs and digital currency exchanges which have to register with authorities and are required to obtain an Australian market license. As the Austalian government is trying to build a legal framework from the beginning, the regulatory scheme in Australia is one of the most comprehensive and clearly defined ones.

How are my cryptos taxed in Australia?

If cryptocurrencies are acquired for personal use or consumption, they are defined as personal use items. Hence, for a private person they are taxed as capital gains. A capital gains tax event occurs when the cryptocurrency is disposed of. A disposal can occur when someone:

  • sells or gifts cryptocurrency
  • trades or exchanges cryptocurrency (including the disposal of one cryptocurrency for another cryptocurrency)
  • converts cryptocurrency to fiat currency like Australian dollars, or
  • uses cryptocurrency to obtain goods or services.

Gains up until $10,000 are exempt of taxation. The limit only applies when disposing of assets whose disposal qualifies as personal use. However, no capital losses for personal gains can be used to reduce taxable income. The tax rate applying on personal assets for residents is between 0 and 45% depending on the tax bracket. On the other hand, if cryptocurrencies are held as an investment for 12 months or more, traders may be entitled to the CGT discount to reduce a capital gain made when disposed of it. Crypto gains are included in the annual income tax return in the year the sale is reported.

How are initial coin offerings regulated in Australia?  

Concerning ICOs, Australian law prohibits misleading or deceptive conduct meaning that initial coin offerings are legaly obligated to not make false or misleading statements especially in promotional communications. Depending on the legal form of the ICO and also crypto-assets, they are subject to general law and corporations act when considered to be financial products or if not defined as financial products subject to general law and consumer law. Despite a quite clear definition and guidance for initial coin offerings, the Australian Securities and Investments Commission (ASIC) advises to carefully consider the nature of an ICO or crypto-asset before engaging in it. An information sheet (INFO 225) issued by the ASIC furthermore gives clear guidance about the potential application for initial coin offerings and digital token businesses.

How do Australian banks handle cryptocurrencies?   

The acceptance of consumers who are involved with cryptocurrencies differs from bank to bank. Two of the “big four” banks in Australia do allow customers to purchase cryptocurrency for now. The Australia and New Zealand Banking Group (ANZ) as well as Westpac have not set restrictions on consumers to purchase virual currencies, still they do not want to issue a statement on whether they are planning a more restrictive policy in the future. Two other players approach the topic more cautiously. The National Bank of Australia (NBA) and the Commonwealth Bank of Australia (CBA) do not proceed some or any transactions in regards to “reduce the risk for our customers, and to help protect their money”.

Free Crypto Tax & Portfolio Software

In recent years, it has been observed that the trade in cryptocurrencies such as Bitcoin, Litecoin and Ethereum has steadily increased. However, many cryptocurrency owners do not consider that the profits or losses from trading cryptos are taxable. Therefore Blockpit offers software that meets the requirements for traders of Bitcoin, Ether and Co. Besides the webapp Blockpit also offers a mobile app that is free for iOS and Android. With the API import, transactions can be imported from different exchanges without much effort. Taxes on cryptocurrencies do not need to be complicated – use Blockpit

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Disclaimer: The information provided in this blog post is for general information purposes only. The information was completed to the best of our knowledge and does not claim either correctness or accuracy. For detailed information on crypto regulations, we recommend contacting a certified legal advisor in the respective country. If any questions occur, feel free to contact us on our social media channels.

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