On Wednesday 26th 2022, the Australian Government released their 2022-23 budget paper with news surrounding cryptocurrency. Australia decided that they will treat crypto as a digital asset and not foreign currency. This means that all trades from crypto are subjected to standard capital gains rates.
Crypto Is Now Considered as a Virtual Asset
The financial reports from Australia Taxation Office (ATO) clarifies that all cryptocurrencies are now defined as virtual assets. They shall stop recognizing crypto as a foreign currency like they did in the past.
“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.”Page 11 of the financial report
The Australian government will adopt laws requiring investors to pay capital gains tax (CGT) on earnings derived from selling or trading cryptocurrency through a centralized exchange. Meaning, traders are required to file every crypto transaction made whether profit or lose.
Furthermore, according to the ATO, GCT transactions are liable to capital tax when investors sell, give, or exchange a crypto asset. Converting crypto to fiat currency or spend their crypto asset on goods or services is included as well. They are now urging investors to disclose capital gains and losses in their Income Tax Return, with a 50% CGT deduction applied if the asset is held for at least 12 months.
Obviously, traders and investors are very much disappointed hearing the new implementations on Australia’s crypto market. However, I can see that this regulation is still in its early stage with rooms for changes and improvements. Imagine scalp traders who does 10-15 trades a day and reporting all trades individually. The hassle and effort just to submit for tax. I am also curious to see how would most crypto exchange react towards this regulation. Does the Australian government plan to tax NFT marketplace and games as well? Let me update you once I find out more. Stay up to date on industry news here at MEXC! Don’t forget to check out more of our trending articles and tutorials!