Crypto Regulations in Australia: A Closer Look
The Australian Taxation Office (ATO) is the primary authority overseeing digital markets and managing the taxation of incomes from digital assets within the country. Australia introduced its initial cryptocurrency regulations in 2019.
In that year, the regulator issued its inaugural guide on cryptocurrency taxation and began collaborating with crypto exchanges that offer services to Australian residents. The ATO officially stated they had a complete roster of active traders since 2014, provided by these platforms.
By 2020, 350,000 Australian crypto investors were alerted, given 28 days to disclose all their transactions and pay due taxes spanning the previous five years.
Approximately 300,000 users complied, reporting their earnings and paying their respective income taxes.
Tax rates were updated on December 1, 2021, and remain in effect to this day.
How Digital Assets Are Classified in Australia
In Australia, cryptocurrencies have been legalized and are considered personal property. This means they're subject to Capital Gains Tax (CGT). If someone trades cryptocurrencies regularly, say at least once a month, their transactions are additionally taxed as income.
The ATO differentiates between long-term digital asset holders and those actively trading on exchanges.
Moreover, those who mine cryptocurrencies pay income tax, as this activity is seen as a form of business.
The ATO categorizes coins with their own blockchain, tokens, NFTs, and stablecoins as cryptocurrencies.
Annual income declarations related to these assets should be submitted by October 31.
Evading such taxes can lead to hefty penalties, up to 75 times the amount that was due.
Crypto Taxes in Australia
Australia uses a progressive income tax structure. There's a tax-free threshold set at $18,200 annually.
Any income exceeding this amount is liable to CGT:
- 19% for income between $18,200 and $45,000;
- 32.5% for income between $45,000 and $120,000;
- 37% for income between $120,000 and $180,000;
- 45% for income exceeding $180,000.
To illustrate, if someone earns $181,000 from selling cryptocurrencies, they'd owe the Australian government $52,117.
This is the case for singular transactions.
If the earnings are from consistent crypto trading, NFT sales, mining, or interest from crypto lending, then an extra income tax of 17% is applied.
On a Brighter Note
Certain crypto-related earnings are CGT-exempt:
- Digital currency salaries.
- Sales from personally-created NFTs.
- Airdrop and referral gains.
- Staking rewards.
If an individual holds onto a cryptocurrency for over a year, they may qualify for a 50% discount on the CGT, even if its value appreciates.
Furthermore, traders who suffer losses due to fraudulent exchange practices or cyberattacks might be eligible to seek compensation, either fully or partially, from the government.
In 2022, Australia compensated approximately $50 million for lost digital assets.
