What does the government think?
Cryptocurrencies and digital assets are legal to own, trade and invest in Australia. That being said, the Reserve Bank of Australia and the Australian Tax Office do not classify it as legal tender.
Are cryptocurrency exchanges legal?
Using a cryptocurrency exchange to buy your Bitcoin is completely legal in Australia. For an exchange to operate they must comply with the:
- Anti-Money Laundering (AML) Act 2006
- Counter-Terrorism Financing (CTF) Act 2006
Exchanges also must register with AUSTRAC (the Australian Transaction Reports and Analysis Centre) – which is also a part of the compliance.
What does AUSTRAC do?
AUSTRAC holds a list of all operating cryptocurrency exchanges in Australia – this is known as the Digital Currency Exchange Register. They make sure exchanges identify and verify their users, maintain records, and comply with government AML and CTF reporting.
Any unregistered exchanges are subject to criminal charges and financial penalties.
Can I pay for goods and services with Bitcoin?
In Australia, your Bitcoin can be legally used for personal or business transactions. Does that mean every business has to accept Bitcoin? No – it’s completely their choice.
As a business, you can use Bitcoin as a form of payment and the same GST rules apply as when receiving cash payments. Added documentation of the GST payable in Australian Dollars must be provided or ‘sufficient information’ to help assist in the conversion process.
Do I have to pay tax on my Bitcoin?
If you’re treating your Bitcoin as an investment by acquiring (buying) and disposing of it (selling), then it is taxable and is subject to CGT (Capital Gains Tax).
On the other hand, if you’re using your Bitcoin as a form of currency to pay for goods and services, then it is not taxable.
Read our more in-depth blog about paying tax on crypto in Australia.
(It’s good practice that you keep records concerning all of your cryptocurrency transactions. Independent Reserve customers can use the KPMG Tax Estimator to calculate their tax obligations from trading crypto).
In that case, can I pay my taxes in Bitcoin?
No. As Bitcoin is not legal tender, it cannot be used to pay taxes in Australia.
We’d like you to keep in mind that all of the above is not legal or financial advice. Speak to a legal or financial professional to better understand the appropriate steps for your circumstances.
Click here for statistical information on Bitcoin.