Australia - Crypto penetration

Australia is one of the first Asia Pacific countries to introduce crypto regulation but is now on the path to tightening it up. In addition, strong competitors such as Hong Kong are emerging in the region.

According to our rating, Australia has a minor level of danger. The country has 53,3 points (from 100) for safety level in Numbeo crime rating(1). Homicide level(2) is 0,9 per 100,000 a year. Level of firearm-related death(3) 0,88 per 100,000 a year.

Crypto payments have been legally allowed in Australia since 2017 as a barter transaction (4), according to the local tax service (ATO). They are allowed for business transactions (5), and “the money value of the crypto assets is an ordinary income of the business. The money value of the crypto assets is worked out when the income is derived.”.

ATO about business transactions with cryptocurrencies

A business may hold and use crypto assets:

Crypto payments are taxable by GST (same tax rate as income tax).

According to ATO’s interpretation (6) of local laws, paying salaries in crypto is legal.

Details

Where an employee has a valid salary sacrifice arrangement with their employer to receive crypto assets as remuneration instead of Australian dollars, the payment of the crypto assets is a fringe benefit.

You also can get more information about crypto salaries in Australia in these articles: 1 (7) and 2 (8). Finder (a web comparison service) and BTC Markets (a crypto trading platform) are offering (9) salaries in crypto.

Cryptocurrency gained legal status in Australia in 2014. The ATO already provided some bylaws for crypto and GST in 2014.

The regulation is based chiefly on standard principles of financial services in the country and some bylaws from regulators, such as:

-Australian Securities and Exchange Commission (ASIC)

-ATO (taxation office)

-AUSTRAC (financial intelligence unit)

Australian Treasury (AT) has given its amendments (10) about current crypto regulations in the country. It concludes that ASIC regulates cryptocurrency operations and crypto entities, which may be referred to as “financial products,” and regulates them according to the “Corporations Act and the Australian Securities and Investment Commission Act 2001 (ASIC Act)”.

Cryptos, not financial products, are considered consumer products and are “regulated by the Australian Competition and Consumer Commission (ACCC) under the Australian Consumer Law.”

Whether a crypto asset is considered a financial product depends on its use, as primarily defined in section 763A of the Corporations Act.

AT position in details

Together with AT current regulations, new regulation proposals are discussed in the Australian Parliament (11). According to it, “the term 'crypto-asset' is an umbrella term to describe products that are also commonly referred to as ‘digital assets’, ‘virtual assets’ or ‘digital tokens’.” Parliament also quotes ASIC’s definition of crypto assets.

A crypto-asset is a digital representation of value or contractual rights that can be transferred, stored or traded electronically. Crypto-assets use cryptography, distributed ledger technology or other technology to provide features such as security and pseudo-anonymity. A crypto-asset may or may not have identifiable economic features that reflect fundamental or intrinsic value.

According to the Crypto Penetration assumption, crypto entities in Australia need to get an AFSL license from ASIC only in some cases - for custodians, significant crypto to fiat exchanges.

It’s unclear if it is essential for all wallets and custodians since ASIC implements a case-by-case approach. This position is based on the FTX Australia license case investigated in local media UNSW Sydney (12).

The Australian financial service (AFS) licensing regime since the late 1990s authorises each firm to do specified things, in relation to specified financial products, for specified clients. Each firm’s licence is different, and what is required by ASIC is different depending on what the firm is authorised to do.

ASIC summarised its current regulation of digital assets in the overview (13) of current regulation from the Australian Senate and regulation proposals.

Details

ASIC currently regulates crypto-assets and related products and services to the extent they fall within the existing regulatory perimeter of ‘financial products and services’. Crypto-assets that are not financial products and services are generally not regulated by ASIC. They may, however, be subject to other Australian laws—for example, the anti-money laundering and counter-terrorism financing laws regulated by AUSTRAC, consumer protection obligations regulated by the ACCC, and the taxation requirements regulated by the Australian Taxation Office (ATO).

AFSL license

You may get more information about ASIC requirements for an AFSL license in this detailed FAQ (17).

New bill

According to official sources and the information in the press, Australia plans to change the regulation framework for cryptocurrencies and create an institution of Crypto asset secondary service provider (CASSP). You may check the details in the toggle below. These are quotes from the AT consultation paper (14).

This framework will replace current regulations and make the CASSP license essential for all crypto entities in the country.

Initially, new regulations were delayed until 2024. However, local senator Andrew Bragg prepared (15) its version of the crypto bill called The Digital Assets (Market Regulation) Bill 2023 (16). This bill includes AT recommendations and is likely to become law soon. It has “licensing permits for exchanges, custody, and stablecoin issuance to safeguard consumers and encourage investors.”

On 30 March 2023, the Senate referred the Digital Assets (Market Regulation) Bill 2023 to the Economics Legislation Committee for inquiry and report by 2 August 2023. On 27 June 2023, the committee tabled a progress report seeking an extension of time to report to 16 August 2023.

However, the country still needs to implement the CASSP regulation regime. So, most crypto entities still need an AFSL license (or acquire a company with it) to provide crypto services.

Tax mame	Index
PIT tax Min	0%
PIT tax Max	45%
Min Individual CGT (for crypto)	22,5%
Max Individual CGT (for crypto)	45%
Corporate tax (CIT)	30%
Wealth tax Min	0%
Wealth tax Max	0%

You may find some information about tax rates and useful tax tables on ATO’s website (18).

PIT and CGT

According to Koinly crypto tax guide (19), CGT tax is implied for:

Selling crypto for AUD or another fiat currency.

Swapping crypto for crypto, including stablecoins and NFTs.

Spending crypto on goods and services, including spending crypto with cards (if your crypto is not a personal use asset).

Gifting crypto.

However, depending on the profit value, the CGT tax has the same tax rate as the PIT tax.

You may see PIT tax rates from the Coinledger crypto tax guide (20). Long-term crypto holders may get a 50% tax discount on capital gains; capital loss may be included in tax reports to decrease taxable profit.

The ATO (21) has released updated guidance on airdrops. In most instances, airdrops are considered ordinary income at the fair market value of the tokens on the date you received them.

CIT tax

Corporations pay CGT tax with the same tax rate as CIT. According to PWC tax summaries(22), Australia has a basic 30% CIT rate. For small businesses, it’s 25%.

1) Crime Index by Country 2023 Mid-Year

2)List of countries by intentional homicide rate.

3)List of countries by firearm-related death rate. This is a historical list of countries by firearm-related death rate per 100,000 population in the listed year.

4) Australian Taxation Office - GST and Digital currencies

5 and 6) Crypto assets used in business (Paying salary or wages in crypto assets) - How to determine the tax treatment of crypto assets (including cryptocurrency and NFTs) used in business

7) Do you pay taxes on a Bitcoin salary in Australia? - The emergence of cryptocurrency payment companies is also helping spread this trend, with people choosing to get paid in Bitcoin and other assets, while remote working also propels this choice. Article

8) How to pay employees with crypto - An increasing number of Australians choose to be paid in crypto by their employers. We will explain every possible way to pay employees with crypto and its tax implications on your business. Article

9)Pourrez-vous bientôt payer vos salariés en crypto-monnaies? (Will you soon be able to pay your employees in crypto-currencies?) - Epsor addresses the issue of salary in crypto! Article

10 and 14) Crypto asset secondary service providers: Licensing and custody requirements.

11 and 13) Overview of digital assets markets and regulation.

12) How FTX Australia claimed it was 'ASIC-licenced’ - The license didn’t extend to cryptocurrency trading and had been granted to a firm FTX took over rather than FTX itself.

15) Australian Lawmakers Submit New Crypto Regulation Bill

16) Digital Assets (Market Regulation) Bill 2023.

17) Information Sheet 225 (INFO 225)

18) Tax tables. Use these quick links to find the pay-as-you-go (PAYG) withholding tax tables.

19) Crypto Tax Australia: How Much You’ll Pay in 2023. Koinly crypto tax guide

20) Coinledger crypto tax guide.

21)Staking rewards and airdrops. How tax applies to crypto rewards and new tokens from staking crypto assets.

22)PWC tax summaries

ATO about business transactions with cryptocurrencies

A business may hold and use crypto assets:

Crypto payments are taxable by GST (same tax rate as income tax).

According to ATO’s interpretation (6) of local laws, paying salaries in crypto is legal.

Details

Cryptocurrency gained legal status in Australia in 2014. The ATO already provided some bylaws for crypto and GST in 2014.

The regulation is based chiefly on standard principles of financial services in the country and some bylaws from regulators, such as:

-Australian Securities and Exchange Commission (ASIC)

-ATO (taxation office)

-AUSTRAC (financial intelligence unit)

Cryptos, not financial products, are considered consumer products and are “regulated by the Australian Competition and Consumer Commission (ACCC) under the Australian Consumer Law.”

Whether a crypto asset is considered a financial product depends on its use, as primarily defined in section 763A of the Corporations Act.

AT position in details

According to the Crypto Penetration assumption, crypto entities in Australia need to get an AFSL license from ASIC only in some cases - for custodians, significant crypto to fiat exchanges.

ASIC summarised its current regulation of digital assets in the overview (13) of current regulation from the Australian Senate and regulation proposals.

Details

AFSL license

You may get more information about ASIC requirements for an AFSL license in this detailed FAQ (17).

New bill

This framework will replace current regulations and make the CASSP license essential for all crypto entities in the country.

However, the country still needs to implement the CASSP regulation regime. So, most crypto entities still need an AFSL license (or acquire a company with it) to provide crypto services.

Tax mame	Index
PIT tax Min	0%
PIT tax Max	45%
Min Individual CGT (for crypto)	22,5%
Max Individual CGT (for crypto)	45%
Corporate tax (CIT)	30%
Wealth tax Min	0%
Wealth tax Max	0%

You may find some information about tax rates and useful tax tables on ATO’s website (18).

PIT and CGT

According to Koinly crypto tax guide (19), CGT tax is implied for:

Selling crypto for AUD or another fiat currency.

Swapping crypto for crypto, including stablecoins and NFTs.

Spending crypto on goods and services, including spending crypto with cards (if your crypto is not a personal use asset).

Gifting crypto.

However, depending on the profit value, the CGT tax has the same tax rate as the PIT tax.

The ATO (21) has released updated guidance on airdrops. In most instances, airdrops are considered ordinary income at the fair market value of the tokens on the date you received them.

CIT tax

Corporations pay CGT tax with the same tax rate as CIT. According to PWC tax summaries(22), Australia has a basic 30% CIT rate. For small businesses, it’s 25%.

1) Crime Index by Country 2023 Mid-Year

2)List of countries by intentional homicide rate.

3)List of countries by firearm-related death rate. This is a historical list of countries by firearm-related death rate per 100,000 population in the listed year.

4) Australian Taxation Office - GST and Digital currencies

5 and 6) Crypto assets used in business (Paying salary or wages in crypto assets) - How to determine the tax treatment of crypto assets (including cryptocurrency and NFTs) used in business

9)Pourrez-vous bientôt payer vos salariés en crypto-monnaies? (Will you soon be able to pay your employees in crypto-currencies?) - Epsor addresses the issue of salary in crypto! Article

10 and 14) Crypto asset secondary service providers: Licensing and custody requirements.

11 and 13) Overview of digital assets markets and regulation.

12) How FTX Australia claimed it was 'ASIC-licenced’ - The license didn’t extend to cryptocurrency trading and had been granted to a firm FTX took over rather than FTX itself.

15) Australian Lawmakers Submit New Crypto Regulation Bill

16) Digital Assets (Market Regulation) Bill 2023.

17) Information Sheet 225 (INFO 225)

18) Tax tables. Use these quick links to find the pay-as-you-go (PAYG) withholding tax tables.

19) Crypto Tax Australia: How Much You’ll Pay in 2023. Koinly crypto tax guide

20) Coinledger crypto tax guide.

21)Staking rewards and airdrops. How tax applies to crypto rewards and new tokens from staking crypto assets.

22)PWC tax summaries

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