Cryptocurrency is the hot topic of the day. It’s an exciting, emerging market that could potentially change the way money works — or not.
But what does this mean for Australia? How do you buy and sell cryptocurrency in Australia? Is it legal? We’ll answer these questions and more here!
Buying And Selling Cryptocurrency Is Legal, But Taxation Laws Apply.
Cryptocurrency is legal in Australia, although it’s not clear whether it will ever be regulated by the Australian Securities and Investments Commission (ASIC). However, while cryptocurrency itself is legal to buy and sell, there are some tax laws that apply to selling cryptocurrency.
And, don’t ever try to evade taxation. As easy as it may seem, avoiding your tax obligations is a surefire way to get in serious trouble.
The ATO has stated that users of digital currencies must pay taxes on any gains they make when trading cryptocurrencies. You should keep records of all transactions involving your assets so you can accurately report them if necessary.
The ATO recommends using tools such as Bitcoin or Ethereum wallets that allow you to generate reports on transactions made with cryptocurrencies on their platforms.
From personal experience, I recommend that you invest in accounting software if you regularly trade in cryptocurrencies. Given how quickly things can change in a heartbeat, it’s important for you to have quality records kept.
There Are Several Ways To Buy And Sell Cryptocurrency In Australia.
Buying cryptocurrencies in the land down under is straight and easy. You can buy crypto with a credit card, at a crypto exchange, with cash, with a bank transfer or debit card, or even by using Paypal.
The main options available to Australian investors are:
- Buy crypto with a credit card/ Debit Card
- Buy crypto at a crypto exchange
- Buy crypto via bank transfer
Most mainstream crypto exchanges accept all of the following methods. When you’re shopping around, make sure that you’re dealing with a reputable cryptocurrency exchange. If the recent FTX collapse is anything to go by, it’s important to keep in mind how volatile the crypto market is.
From our point of view, I believe that it’s a lot safer to invest in a cold wallet, like the ones that Tezro suggests, to store the bulk of your assets. While it’s less convenient, the security offered by these devices is hard to beat. After all, you won’t have to worry about your life’s savings suddenly disappearing overnight.
Investors Must Declare Capital Gains Tax When Selling Their Cryptocurrency.
When you sell your cryptocurrency, you must declare capital gains tax. The Australian Taxation Office (ATO) has released a guide on crypto tax regulations and how they apply to different tokens like Bitcoin, Ethereum and Litecoin.
Crypto investors should keep in mind that capital gains tax is based on the amount of profit you make from selling your cryptocurrency, not just buying it and holding onto it as an investment.
The current rate of CGT is 37% for individuals with incomes above $18 200 and 19% for those under that threshold.
Australia’s Policy On Capital Gain’s Tax
Here is an example from the ATO on how capital gain’s tax is calculated.
Capital gain – this applies when you make money from selling goods or property that have increased in value since purchase (including bitcoin).
You need to calculate your capital gain by subtracting any cost base from the proceeds received from selling the asset(s). The difference between these two figures represents your net capital gain; this amount will be subject to income tax at marginal rates plus CGT if applicable.
For example: If someone bought 1000 BTC for $0 USD during its early days then sold them all at their current price of $13 000 USD today ($13 900 000 total value), they would pay no income tax on those profits because they haven’t earned any income yet (they would however pay capital gains taxes depending on how much profit they made per coin).
If someone bought 1000 BTC during its early days then sold them off at their current price of $13 000 USD today ($13 900 000 total value), they would still only owe income tax because even though there was growth between buying/selling times they never actually took possession of anything physical themselves. This is because no actual sale occurred legally speaking until now!
To ensure that you don’t get in trouble with the authorities, I highly recommend that you seek out the services of a professional tax accountant. One who has been ideally certified by CPA Australia.
Crypto assets are highly volatile. Despite how profitable investing in cryptocurrencies can be, there is still a major element of risk involved.
The exchange could suddenly collapse or your token of choice may become worthless overnight. Because cryptos are not backed by any one central authority, it’s important for investors to understand the risk of these digital assets.
You cannot use crypto tokens in Australiaas legal tender. While crypto tokens are somewhat tolerated by the Australian government, digital currencies are in no way recognized as legal tender.
So don’t expect to use Bitcoin or any other cryptocurrencies to pay for your drink at the pub or dinner at a cafe. Fortunately, Australia has a strong community of crypto enthusiasts who support crypto usage. And if you’re lucky enough, you may even be able to make private purchases with the coin.
When in doubt seek out the services of a professional. Tax issues are a real headache even for an experienced investor. So, if you’re having trouble filing taxes for your crypto gains, it’s best to consult with the ATO or a professional tax accountant.
These experts have both the knowledge and skill needed to help you get all the related paperwork done with minimal fuss. Remember: failing to pay your taxes can and will lead to serious repercussions.
It’s clear that buying and selling cryptocurrency is legal in Australia. But it’s also important to remember that it’s not just fun and games — you have to declare your earnings as capital gains tax, which means you need to keep track of your transactions and records.
Of course, there are plenty of ways for crypto investors looking for an easy solution here too (like investing through a fund or exchange), but for those willing to go through the trouble there are plenty more options.