How does Australia tax cryptocurrencies?

A recent decision in a criminal court case classifies crypto assets as money. This goes against a longtime crypto tax Australian office that counts crypto as capital gains.

The court’s ruling, including a federal police officer who allegedly stole 81.6 BTC in 2019, has resurfaced as more traders are fighting how cryptocurrency should be taxed in Australia. On May 19, Judge Michael O’Connell ruled that Bitcoin (BTC) should be treated as money, not as a taxable asset.

This means that the judge declared Bitcoin to be more similar to Australian dollars, rather than speculative assets such as gold, stocks, and foreign currency.

According to the Australian Tax Office website, Crypto Tax Australia classifies crypto under property rather than currency. More specifically, Crypto falls under the capital gains tax, based on the current framework used by the tax office.

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As of June 24th, the website classifies cryptography under property with swaps, defi and capital gains of wrapped tokens. However, the ruling could mean that Bitcoin falls into Fiat currency and could be exempt from the current capital gains tax framework.

How does Crypto Tax Australia run?

Under the current framework, Crypto is considered an investment. Therefore, crypto assets fall under the capital gains tax mechanism. According to the website, activities that involve conducting crypto transactions, such as selling, exchanging crypto, or spending, are considered capital gains tax events.

Meanwhile, revenue generated from encryption, staking, or revenue is counted as normal revenue instead of capital gains. In such cases, normal income tax applies to profits.

However, crypto assets for personal use at a value of less than AUD 10,000 ($6,503) are considered exempt from capital gains tax. However, those exceeding the threshold are subject to CGT, based on the Crypto Tax Australia framework.

Most recently, Australia has introduced cash trading restrictions on crypto ATMs. The rules require Crypto ATM operators to introduce cash deposits of more than AUD 5,000 and withdrawal caps at $3,251. Not only that, the operator must also view notifications and warn users of the risk of potential fraud.

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