Australia’s stance on BTC could have dire tax implications for investors: report
The Australian federal budget has been made public, and upon further review, virtual currencies are explicitly mentioned in the text. According to the wording of the national budget, BTC will not be treated as a foreign currency for for tax purposesleaving investors at a disadvantage.
There was some confusion about the status of BTC after That of El Salvador elevation of the asset as legal tender in September 2021. The new decision has ended speculation on whether or not to adopt Bitcoin as a national currency, but opens a Pandora’s box for its taxation.
After conferring with the Board of Taxation, investors in Bitcoin and other digital currencies in Australia will have to pay capital gains tax on profits from the sale of assets. The board said “this clarification will provide a consistent tax requirement for holders of crypto assets,” especially after El Salvador’s decision.
Australian regulators have used token mapping, a strategy adopted in August that pays attention to the characteristics and underlying code of virtual assets to determine the mode of regulation. Talis Putnins, a block chain researcher at the University of Technology Sydney, warned that it would be unwise for the government to merge all virtual currencies “into one basket, as they are extremely varied”.
Michael Bacina, a partner at law firm Piper Alderman, noted that this was the first time “crypto” was mentioned in federal budget documents and should be interpreted as a sign of growing adoption. To counter the threat, the country’s central bank is considering launches its own central bank digital currency (CBDC) to compete with virtual currencies.
The new position can be a kick in the foot
Choosing to impose a capital gains tax on digital currencies could have disastrous effects on the central bank’s quest to launch CBDCs, says Mitchell Travers, founder of blockchain consultancy Soulbis.
“It would be ill-advised for the government to really take an enforcement approach to taxation of crypto assets in its early stages, especially given that the Treasury is also investing in trying to migrate the traditional technology systems that support our financial system. to digital assets,” Travers said.
There are fears that Australia’s local virtual currency ecosystem is catching up with Europe and the United States. The UK has a pro-digital currency prime minister at the helm, while the European Union has adopted a progressive and united approach to the development of virtual assets in the region.
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