Australia is going to be a global digital innovation leader. In the development of draft legislation, the local government uses the experience of other regulatory bodies and blockchain functions. Australian law doesn’t treat cryptocurrency as money, but it is legally regulated.
Cryptocurrency regulations in Australia
Bitcoin (as well as other digital coins) was officially recognized in 2017 after the official statement of the Reserve Bank of Australia. It’s been four years; however, this time was not enough to regulate all issues related to cryptocurrency. Local legislative bodies have faced a number of challenges.
Taxes
By October 2021, local authorities have not yet developed specific laws. Australian Taxation Office considers cryptocurrency as buying and selling an asset, but not as money.
- Sale and exchange. Digital assets serve as shares. Losses are deducted from income. If a person managed to earn money, he/she is obliged to pay the Crypto Tax in Australia. Such activity can be considered as business, but in this case, many factors should be taken into account: availability of document circulation system, regularity of transactions, profit-making, etc.
- Transaction. Each translation is considered as part of the business activities.
Mining. Users can mine coins using specialized equipment or receive them at the expense of other tokens as a validator or network node. Such assets are considered ordinary income. Miners with an annual turnover of more than 75.000 AUD must pay taxes. - Issuer. The law provides for ICO. The company must pay a corporate tax of 26-30%. The only exception is the issue of coins using the borrowed capital.
If the amount of investments is less than 10.000 AUD, the user is exempted from taxes.
Consumer protection
Regulators are planning to develop a mechanism for the safe storage of cryptocurrency. Users need to be sure that their coins will not be stolen.
In October 2021, Australia has passed a new law that gives law enforcement agencies the power to freeze digital assets. This is due to an increase in the incidence of fraud and thefts. The effectiveness of the law remains controversial because to freeze the wallet, the police needs to get direct access to it.
Future regulations
The laws need further elaboration. Senate Committee submitted further recommendations for consideration. The amendments concern a number of paragraphs:
- Anti-money laundering guidelines.
- Crypto Tax Australia regulation.
- Development of programs for safe storage of coins.
Proposals will be accepted no earlier than 2022.