The Australian Treasury has announced that cryptocurrency will continue to be excluded from foreign currency tax arrangements.
This decision came about after the Government of El Salvador granted Bitcoin the status of legal tender, which in turn created some uncertainty with regard to the status of Bitcoin for tax purposes in Australia. As such, the Australian Treasury has decided to back date cryptocurrency investments to 1 July 2021 for tax purposes and continue to apply capital gains tax to investments into crypto assets. This is designed to avoid ambiguity and give clarity at a time of volatility in the crypto market.
The Australian Government has said it will take a pragmatic approach to the evolution of digital currency. This indicates that it will likely reassess the workings of the current tax regime and amend legislation to specify how cryptocurrency will be taxed in future financial years.
Right now, organisations and individuals involved in the trading of cryptocurrency should carefully review their tax obligations in light of the Australian Taxation Office’s increased level of scrutiny into cryptocurrency assets.
For the full reading of the media release, see here.