Cryptocurrencies are experiencing a boom, with their values reaching new all-time highs regularly. This boom has led to increased scrutiny from tax authorities worldwide, ensuring citizens pay their fair share of taxes on digital currencies.
Australia is not far in this regard, and the Australian Taxation Office (ATO) has recently released guidance on the taxation of cryptocurrencies. Crytpo tax Australia has been a topic of discussion over the past few months as the Australian Taxation Office (ATO) looks to clarify the tax treatment of digital currencies. As a result, the ATO has released a draft guidance paper that states that cryptocurrency is not currency for tax purposes and will be treated as an asset for capital gains tax (CGT) purposes.
How Does ATO Classify Cryptocurrency?
The ATO has not released an official statement on how it will tax cryptocurrency but has indicated that it will show as an asset or property. This recognition means there are likely tax implications for capital gains when trading or using cryptocurrencies.
At this stage, there is less clarity on how the ATO will treat the use of cryptocurrency for purchasing goods and services. Still, any transactions will likely be treated similarly to barter transactions. Again, this is because the ATO does not view cryptocurrency as foreign or fiat currency.
What Is Crypto Taxation In Australia?
Cryptocurrencies are decentralised. These currencies are not subject to government or financial institution control. This lack of control makes cryptocurrencies attractive to many investors who distrust centralised economic systems. However, because governments do not regulate cryptocurrencies, their legal status is uncertain.
This lack of regulation also means no clear guidance on taxing cryptocurrencies. In Australia, for example, the Australian Taxation Office has not released specific advice on how to tax cryptocurrencies. As a result, many taxpayers are confused about how to report their cryptocurrency transactions on their tax returns. Currently, there is no tax on cryptocurrency in Australia. Instead, there is record maintenance and record-keeping for the investors that trade, own, buy or purchase crypto tokens.
Is Cryptocurrency Legal In Australia?
Cryptocurrencies are legal in Australia. No specific laws deal with cryptocurrencies, but they are generally covered under the general rules that deal with money and financial transactions. In August 2017, the ATO released a guidance paper on the tax treatment of cryptocurrencies. The ATO stated that cryptocurrencies are not considered money, but they can be used to purchase goods or services or exchanged for other currencies.
It also stated that cryptocurrency profits and losses will be treated as capital gains and losses and will be taxed accordingly. For individuals, capital gains tax is at either: a concessional rate of 10%, which applies to assets held for one year, or at your marginal tax rate, which applies to assets held for less than 12 months.
Is Cryptocurrency Being Tracked In Australia?
Cryptocurrency is being tracked in Australia, with the government keeping a close eye on digital currencies like Bitcoin. While there is no specific regulation around cryptocurrency yet, the government has clarified that it will be monitored to ensure that it isn’t being used for illegal activities.
So far, the ATO has been relatively quiet on how it plans to treat cryptocurrency. Still, they will likely apply the same rules to digital currencies as other investments.
Final Verdict
Crypto tax in Australia is an important topic. The Australian government is taking a tough stance on cryptocurrencies and their taxation. This taxation is a positive step forward in legitimising cryptocurrencies as an asset class and protecting investors. However, there is some lack of clarity surrounding the tax treatment of crypto-assets. It will be interesting to see how the government and tax authorities further clarify the tax treatment of crypto-assets soon.
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