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Understanding Cryptocurrency Tax in Australia

Take a closer look and learn about the crypto tax regulations in Australia.

Posted May 23, 2023
Last updated February 5, 2024


Cryptocurrencies have formed a borderless payment system that, while they have managed to decentralize the economy for many people, this also represents an advantage for organizations with illegal purposes, especially the deep web markets and illicit urban transactions paid for in crypto.

For this reason and many others, the Australian Government maintains a control over the manipulation of digital assets in national territory and has imposed some rules, which will definitely have an impact on your tax payment if you have earned income trading cryptocurrencies.

All citizens must keep a record of their movements with cryptocurrencies, especially if they are receiving an income.

How does cryptocurrency tax work in Australia?

The taxes that cryptocurrency traders have to pay are going to depend directly on the nature of the operations they perform, but they will have to be paid even if you are using a foreign cryptocurrency exchange.

CGT (Capital Gain Tax) will be charged when selling cryptocurrencies, acquiring goods / services through them, exchanging them for fiat currency such as AUD or other cryptocurrencies.

In short, if you get some kind of capital gain from a cryptocurrency transaction, regardless of how it was done or for what purpose, a portion of that income will be taxed.

Illustration for crypto tax with bitcoin

However, if this type of crypto transaction comes from a formal business, these gains will be perceived as regular income (like any other) and not as capital gain. It should be noted that each cryptocurrency involves different CGTs.

Every time you carry out a cryptocurrency transaction that leaves you a profit margin, said profit will be calculated in AUD and subsequently taxed.

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For example, if an Australian buys 2 BTC at a price of $10,000 each and the market drives the price towards $15,000, the user would be making a net profit of $10,000 AUD, so taxes will be applied based on $10,000.

Here are two different ways how cryptocurrency tax works in Australia:

Tax on cryptocurrency in business or professional income

As we have previously mentioned, those people who have businesses running and carry out some type of transaction in cryptocurrencies, will be taxed as regular income, just as any other type of activity would be.

The ATO (Australian Taxation Office) considers these transactions as regular income when they come from:

  • Cryptocurrency mining,
  • Professional trading in the crypto market,
  • Solid businesses that involve cryptocurrencies and businesses related to the exchange between some good for cryptocurrencies, such as restaurants or other businesses that accept Bitcoin (which are common in Australia).
Illustration for Bitcoin and crypto tax

Now, whether the ATO considers the product of a crypto transaction as regular income or not will totally depend on the parameters under which said transaction was made, the business plan existing at the time of carrying it out, paperwork or digital records on scheduled payments, among others.

Tax on cryptocurrency as personal investment

If an individual’s cryptocurrency operations escape the aforementioned parameters, they will be considered as CGT.

This case is very common among entrepreneurs, freelancers and freelancers who do not have a company or business organization beyond their knowledge and ability to invest.

The ATO considers personal investments to be small-scale cryptocurrency mining, trading when done occasionally and without a plan that leads to consistency and buying cryptocurrencies as a hobby, in order to earn some kind of income from your investment.

What is ATO?

The Australian government collects taxes on individuals and businesses through the Australian Taxation Office (ATO).

Each citizen or company must request this taxpayer number (tax file number), which is individual and non-transferable and is used by the ATO for identification and registration purposes.

The logo of Australian Taxation Office who manages the cryptocurrency tax in Australia
The logo of Australian Taxation Office (ATO)

Citizens can request the taxpayer number online 24 hours a day, 7 days a week and the only information required is the passport number and the address of the citizen. Obtaining the taxpayer number takes 10 days from the citizen’s online registration.

There are also paper forms that citizens must fill out and send directly to the ATO. Using this procedure, the process can take 28 days.

The taxpayer identification number must be well protected. It should not be supplied to third parties, except in very specific cases such as when a bank account must be opened.

How does the ATO classify cryptocurrency in tax regulations?

The ATO recognizes cryptocurrencies as digital assets that are not issued by any government or political/financial entity, but rather work decentrally through a blockchain network, whereby all records of transactions made are kept without the possibility of being falsified/modified.

It is necessary to mention that the last years have been very important for the launch of new cryptocurrency projects and not all are equal to Bitcoin.

Despite the fact that almost all of these digital assets share characteristics (such as a particular blockchain and borderless transactions), the ATO remains open to change or reclassify cryptocurrencies should a project with different properties appear. For example, if any bank launched a centralized cryptocurrency.

How to keep record of cryptocurrency transactions?

Regardless of how you use your cryptocurrencies, each Australian citizen must keep track of their transactions, regardless of whether it is for personal purposes or for reasons of a particular business.

Maintaining this record is important to successfully meet your cryptocurrency tax obligations and thus, be able to carry out an estimate of your income, losses, expenses and more.

The illustration of Bitcoin (BTC), cryptocurrency tax report sheets in Australia, and calculator

In order to keep track of your transactions in cryptocurrencies, you must save a series of data regarding these operations:

  • Transaction Date: The day on which a transaction was made with a digital asset.
  • The value of the cryptocurrency used in AUD at the time of the transaction: Assuming that you made transactions with Bitcoin on May 5 at a value of $ 8,000, this would be the value chosen to establish the tax.
  • Reason for the transaction and recipient: This means that you will have to explain the purpose of the transaction (be it the payment of a service, deposit, exchanges, etc …) and to whom the tokens were sent. Here we can understand how OTA works to limit illicit activities in crypto.

In addition, you must keep records regarding any activity that you have maintained in crypto spaces. This information will not be directly delivered to the ATO but will help you keep detailed records of the transactions you have carried out.

  • Receipts and invoices for online purchases and investments in cryptocurrency exchange companies
  • Accounting records
  • Activity logs on wallet platforms (where users keep their cryptocurrency tokens)
  • Software expenses to calculate your tax obligations

Saving this information will prevent you from losing track of your expenses and taxes, so making a habit of this record is a great idea.

Future of crypto

As of this writing, there are at least 2M+ distinct tokens, not to mention that new projects with brilliant ideas are constantly emerging, which are seized upon by futuristic technologies to exert a function.

That is, it is not only a good idea from the economic point of view, but they will also help you learn, optimize your performance in different obligations and even for entertainment.

Cryptocurrencies floating in the air with a white background.

Bitcoin in particular, was created to be a deflationary currency (its value will increase over time), the mining reward is chopped in half every 4 years (in an event called halving) – thus making Bitcoin’s total supply finite and increasing its demand dramatically every certain period. of time. This causes the price of BTC to increase “The lower the supply, the greater the demand”.

Below are some benefits and considerations for investing in crypto:

  • Anonymity and Privacy: Anonymity and privacy are another of the strengths of cryptocurrencies, because the blockchain system prevents external parties, organizations and governments from knowing what you are investing or buying in, how much you have spent and who you are buying from.
  • Transaction costs: The fees for transaction with cryptocurrencies are much lower than those made with traditional currencies. Transaction costs are typically zero to very low for cryptocurrency exchange as miners are compensated by the network.
  • Accessibility: Traditional assets and certain equities can be difficult to access without a centralised institution. However, with cryptocurrencies it is easy, not as many permits are required and businesses operate 24 hours a day. You can receive and send cryptocurrencies without expensive software, without extensive training or licenses, and nobody can stop you from investing.
  • Easy to handle: It is becoming increasingly complex to carry large amounts of money from one place to another. Carrying thousands in cash can be a problem; However, with cryptocurrencies all these difficulties are solved, since it is possible to carry any amount of money in cryptocurrencies in just a flash memory.
  • Transaction speed: With cryptocurrencies, you can send money anywhere in the world, without restrictions and it will arrive in just minutes. It will only take the time it takes for the network to process the payment.
  • Low inflation risk: Although their prices change in the market depending on bullish/bearish trends, cryptocurrencies have very low inflationary risk. This happens because all the traditional currencies in the world are controlled by governments and if they face a crisis, then their currency suffers the effects, which leads to a devaluation in the value of the currency. Because governments do not directly control cryptocurrencies, they cannot mismanage them and consequently, they are not capable of damaging their value, as has happened in countries like Venezuela.

You can buy any cryptocurrency in Australia from a local exchange platform, although it is recommended that you choose one that serves your needs in terms of rates, manageability, the fluidity of the system and details of the wallet.

Screenshot of Easy Crypto Australia Homepage

Easy Crypto AU is a local exchange platform on which Australian residents will be able to buy Bitcoin and other cryptocurrencies directly in AUD through bank transfers.

After registering in the Easy Crypto system, you will have to verify your account with a KYC process and you will be able to buy Bitcoin, Ethereum, Dash, Digibyte, Litecoin, Ripple and many other cryptocurrencies. If you have questions, the customer support team will be ready to accompany you on your orders.

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Disclaimer: Information is current as at the date of publication. This is general information only and is not intended to be advice. Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.

Last updated February 5, 2024

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