Statistics show that around 74% of Australians who own cryptocurrency prefer Bitcoin, while 88.8% of the population are only aware of it. Even though that is a significant number, Australian law is yet to treat cryptocurrency as money.
Nevertheless, cryptocurrency undergoes the rules of the state. All crypto exchanges must register with AUSTRAC or the Australian Transaction Reports and Analysis Center.
If you are wondering, is Bitcoin legal in Australia or what are the rules on its transaction, here are some answers:
What is the law in Australia on cryptocurrency?
As mentioned earlier, the government in Australia does not consider any cryptocurrency, including Bitcoin, like money. However, in 2017, the government declared that all digital currencies were legal, and they were subject to the AML/CTF, or Anti-Money Laundering and Counter-Terrorism Financing Act 2006. It also stated that Bitcoin would be treated as property and covered under the Capital Gains Tax or CGT. In 2018, AUSTRAC or Australian Transaction Reports and Analysis Center established clearly defined cryptocurrency exchange regulations. Updated regulatory requirements for both trading and initial coin offerings or ICOs were introduced by the Australian Securities and Investments Commission or ASIC.
Are taxes levied on Bitcoin?
Some transactions involving Bitcoin will attract Capital Gains Tax or CGT. According to the law, it comes into effect when you sell, trade, exchange, convert or dispose of cryptocurrency. Any capital gains made while selling the money will be taxed. However, if you are a business organization and make profits while disposing of cryptocurrency, it will be treated as ordinary income. When you sell one digital currency to buy another one, the laws treat it as disposing of and acquiring a CGT asset. Since you have received property instead of money, its value has to be clearly stated in Australian dollars. If the concerned authorities cannot carry out the valuation, the capital proceeds will be determined using the market value of the disposed coin. If any digital currencies are purchased for investment or business purposes, taxes will have to be paid on any capital gains while selling it in the future.
What happens if I do not declare my taxes?
If you have sold any cryptocurrency as a profit and have not declared it yet, you might be contacted by the Australian Taxation Office. They will remind you of your tax obligations and ask you to include the capital gains made in the tax returns. If the ATO feels that you did not declare the profits intentionally, you will have to pay a penalty of 75% of the outstanding tax liability.
However, capital gains or losses will not be applicable if you use crypto to purchase goods and services. It is essential to maintain the records for each transaction methodically, including its date, value in Australian dollars and purpose.
How to Invest in Bitcoin?
To invest or exchange cryptocurrency, you must create an account in a crypto exchange platform. The company might ask you to provide details like name, country of residence, email and contact number. The total fees and the number of features may vary from one platform to another. After creating an account, you can deposit funds using various payment methods. Once the deposit is accepted, you can start investing and dealing in Bitcoin.
Is Bitcoin legal in Australia?
Yes, it is legal. But you should be aware of the various tax mechanisms and laws surrounding it, particularly the ones mentioned above. Cryptocurrency offers some incredible benefits, including complete control over your money, which is one reason behind its popularity.