In this piece, we break down Australia's overall attitude to cryptocurrencies.
Even though trading and holding digital currency is completely legal, the taxation office has issued a stark warning to citizens that they must disclose any capital gains from cryptocurrency trading. Taking all this into account, broadly speaking Australia offers a relatively friendly environment for crypto investors and new companies in the industry.
This beginners’ guide will cover the legality and crypto climate in Australia, and will also provide advice as to where Australians can safely buy digital assets.
Is Cryptocurrency Legal in Australia?
Even though the government is relatively accepting of blockchain and digital currencies, they have still imposed a few rules it’s worth being aware of.
In Australia, cryptocurrencies are viewed as digital assets and are monitored by the Australian Securities and Investments Commission (ASIC). The regulations are in place to enforce best practices for ICOs and crypto exchanges, as well as crypto service providers. As with most governments, the government is especially vigilant when it comes to the potential for money laundering and other illicit activities.
Key guidelines include the classification of various types of crypto tokens, what constitutes a crypto exchange or trading platform, and what counts as a payment services provider. The rules require crypto businesses to be transparent in filing their reports and taxes and to remain on the alert for possible money laundering or terrorism financing.
Crypto’s status in Australia can be summarized with a few key points:
- Cryptocurrency is legal in Australia and is defined as a digital asset
- The government has explored the potential of blockchain technology, including researching the issuance of a CBDC
- ASIC monitors crypto trading activities and crypto businesses
- Australia enforces strict anti-money laundering measures
Are Crypto Assets Taxed in Australia?
Yes, cryptocurrency is taxed in Australia by the Australian Tax Office (ATO). ATO keeps track of crypto investors by collecting information from crypto brokerages and exchanges. All crypto investors will need to pay capital gains tax to avoid penalties from the ATO. If you have received crypto as payment for services, you are liable to pay income tax on those earnings, just as you would if you were paid in AUD.
You will need to pay taxes after making the following transactions:
- Selling crypto for AUD
- Trading one cryptocurrency for another, e.g. buying ETH with BTC
- Purchasing goods or services worth in excess of A$10,000
- Gifting cryptocurrency
Come tax season, Australians simply report their capital gains or losses as they would for securities.
Taxes on Mining
In short, unless you are running a large-scale crypto mining operation, you will only need to pay capital gains tax when you sell the coins you’ve earned. However, if you are mining as a business, your tokens will be assessed as taxable income as soon as they are mined.
Who Accepts Cryptocurrency in Australia?
- The Old Fitzroy Hotel. This hip pub, brasserie and theatre in Woolloomooloo will gladly accept Bitcoin for beer and everything else.
- Spawn Point Bar. A video game and arcade bar on Clarence Street.
- Black Star Pastry & Cafe. This famous cafe will accept crypto payments for pastries and the “world’s most Instagrammed cake.”
- Altius Coffee Brewers. An inviting and fun coffee shop on Flinders Lane, Melbourne.
- Eclectico. A trendy fashion boutique that sells clothing, accessories and vinyls.
- Aiyana Retreat. This retreat offers luxurious accommodation for holidaymakers in Perth.
- Frisk Small Bar. Perth’s premier gin bar.
Where Can You Buy Crypto in Australia?
Investors can purchase crypto assets by setting up an account with a trusted exchange. Most popular United States-based and international exchanges are available to Australians and there are excellent Australian exchanges as well, such as CoinSpot. Many of these options will directly support AUD deposits.