The Australian Government will impose new regulations to tax digital assets, including cryptocurrencies, on standard capital gains rates.
Australian Government Derails Crypto
The Australian Government has enacted new regulations concerning the taxation of fungible digital assets such as cryptocurrencies. According to the latest financial reports from the Australian Taxation Office (ATO), the Government of Australia no longer recognizes Bitcoin and other digital currencies as foreign currencies as the trend was initially.
The new sanction now clarifies that Australian authorities only recognize Bitcoin and other cryptocurrencies as virtual assets, just like stocks and Real Estate. With this in mind, the embargo has exposed crypto investors to filing capital returns on every transaction of cryptocurrencies, regardless of whether the transaction resulted in a loss or profit.
Capital gain rates are charges imposed by the Government on investments recognized by the law. According to ATO, cryptocurrencies are digital assets, not virtual currencies like the world presumes.
Australia Taxation Office wrote on page 11 of the report:
“The Government will introduce legislation to clarify that digital currencies (such as Bitcoin) continue to be excluded from the Australian income tax treatment of foreign currency. This maintains the current tax treatment of digital currencies, including the capital gains tax treatment where they are held as an investment.”
The AOT report also indicated that the Australian Government would not accept Bitcoin as a legal tender like the Government of El Salvador did back in June 2021. However, the sanction will not apply to any virtual currency issued by the Australian Government’s finance department. Following the sanction, Australia may be in plans to become one of the first states to launch a centralized, regulated virtual currency. The Australia Taxation Office may have revised the sanction to make its future centralized virtual currency more lucrative for seasoned Australian investors than the blockchain-based currencies currently in existence.
The AOT report continued to state that:
“This measure removes uncertainty following the decision of the Government of El Salvador to adopt Bitcoin as legal tender and will be backdated to income years that include 1 July 2021. The exclusion does not apply to digital currencies issued by, or under the authority of, a government agency, which continue to be taxed as foreign currency.”
The Sanctions Trail Back
The ATO has been on the neck of decentralized currencies such as Bitcoin. In May, the taxation office warned all Australian citizens and non-citizens currently residing within the country’s jurisdiction. The warning post was posted on AOT’s official webpage and stated that capital gains would be charged from digital assets captured from property and shares.
The post warned that:
“If you dispose of an asset such as property, shares, or a crypto asset, including non-fungible tokens (NFTs) this financial year, you will need to calculate a capital gain or capital loss and record it in your tax return.”
It will be interesting to see how Australians react to the new crypto regulations concerning decentralized currencies. In the meantime, it will not be surprising to see new rules concerning crypto exchanges such as Binance and FTX offering digital asset services such as NFT Marketplaces and crypto Exchanges in Australia.