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Highlights
- Bitcoin and altcoin trading is permitted in Australia, with investors required to keep a record of all transactions
- Crypto assets attract capital gains tax. However, the ATO allows disregarding capital gains in personal use cases
- Disposal of a crypto asset also includes conversion to fiat currency, and gifting or donating the asset
Cryptocurrencies, which include Bitcoin (BTC) and thousands of other tokens, usually come with some degree of confusion. First, is it legal to hold cryptocurrency? Second, is it legal to transact on cryptocurrency trading platforms? The questions can be many. In Australia, it is legal to hold crypto and trade it like any other speculative asset.
This is in contrast to some nations, like China, which have imposed a complete ban on crypto-related activities. On the other hand, a few nations like El Salvador treat Bitcoin (the biggest crypto by market cap) as legal money, which means people can use it like fiat currencies. That said, Australia only permits holding and trading, while it is also necessary to declare cryptocurrency to the Australian Taxation Office (ATO).
Let us know more about crypto reporting and taxation in Australia.
ATO and cryptocurrency
First, Australian regulators have not taken any measure that restrict or prohibit cryptocurrency trading. The country’s central bank, the RBA, has even suggested using Ethereum (Ether token’s mainnet) blockchain in its CBDC project. For now, Bitcoin or any other token is not recognised as money, which is why the ATO uses the term ‘crypto assets’. The agency has declared that these assets are subject to capital gains tax.
Besides, the ATO says that disposal of any cryptocurrency -- no matter if it is liquidated at a loss or at a profit -- in any way, including donating or gifting, should be reported. The agency mandates keeping a record of crypto transactions, including documents, for at least five years after disposal.
Personal use asset
It is only when a cryptocurrency is held as a personal use asset that the reporting of transactions and the levy of any tax can be disregarded. The ATO stipulates that when a holder keeps a cryptocurrency to buy any item for personal consumption and not as an investment, it becomes the case of personal use asset.
Data provided by CoinMarketCap.com
Bottom line
The ATO mandates preserving the records of all crypto assets-related transactions. Besides, reporting any income that accrues from the disposal of any such asset is also mandated. Notably, the ATO’s definition of crypto assets also includes non-fungible tokens, which are different from typical cryptocurrencies but are based on the same blockchain technology.
Risk Disclosure: Trading in cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory, or political events. The laws that apply to crypto products (and how a particular crypto product is regulated) may change. Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading in the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed. Kalkine Media cannot and does not represent or guarantee that any of the information/data available here is accurate, reliable, current, complete or appropriate for your needs. Kalkine Media will not accept liability for any loss or damage as a result of your trading or your reliance on the information shared on this website.
