Features of cryptocurrency business in Australia
According to statistics, one out of every five Australians owns cryptocurrency. It is 100% legal to buy, sell, exchange, spend, receive, store and use it for everyday transactions in the Lucky Country. The cryptocurrency business in Australia is regulated, making transactions safe and transparent.
Features of cryptocurrency in Australia
The most popular digital currency in Australia is bitcoin. It was legalized in 2013 when the Governor of the Reserve Bank of Australia said that nothing should prevent people from paying in the currency they want. Since there is no prohibition, competitive currencies can be used as well.
Thus, Australians started to use bitcoin for both personal and business transactions. It became possible to pay with it in cafes and hotels. You can even buy a car or a house by paying with bitcoin. The only nuance is that the seller must agree to this method of payment, otherwise, the buyer has to pay with real money.
Cryptocurrency and taxes
Bitcoin is not treated as a monetary unit in Australia, but as property on a par with a house or car. So bitcoin payments for real estate purchasing, for instance, are treated as barter and it has similar tax consequences. If you use cryptocurrency as an investment, it is subject to capital gains tax. However, if bitcoin is used for daily transactions, it's not necessary to pay a tax.
As for business transactions, you need to be aware of the following details:
- The price of bitcoins in Australian dollars received for goods and services is treated as part of ordinary income, similar to a barter transaction.
- A business that buys goods for bitcoins is entitled to a deduction based on the market value of the item purchased.
- Capital gains tax would have to be paid if the company decides to get rid of the bitcoins.
- If the company is mining or exchanging cryptocurrency, it must include the profit in the assessed income and deduct expenses.
- If the company pays an employee in cryptocurrency, it is considered an additional benefit or a regular salary with all taxes deducted.
Cryptocurrency activity in Australia
The laws strictly control crypto activities to protect consumers, prevent fraudulent transactions, and prevent money laundering. That's why in Australia you need a license if you want to:
- engage in cryptocurrency exchange service;
- open a cryptocurrency exchange;
- issue coins that are a financial product (ICO).
This information corresponds to the guidance issued by the Australian Securities and Investments Commission (ASIC) in spring 2019.
Laws that regulate cryptocurrency activities
Cryptocurrency companies must also comply with the following laws:
- The Corporations Act;
- ASIC Act;
- Australia's Consumer Protection Act;
- Anti-Money Laundering (AML) obligations and Know Your Customer (KYC).
Operation of crypto exchange
Before crypto exchanges can be launched they must do more than just register and get a cryptocurrency license in Australia. They are required to identify and verify users, keep records and indicate the following:
- the date of the transaction,
- the purpose of the transaction,
- the amount in Australian dollars,
- information about the other party, even if there is just a bitcoin address.
There is no way to get away with it. The Australian Transaction Analysis and Reporting Center (AUSTRAC) has been monitoring crypto activity since 2018.
ICOs can officially be used as an investment vehicle. The Corporations Act defines these point:
- people can contribute cryptocurrency to get a stake in an investment fund;
- all contributions are pooled or used in a common enterprise to obtain financial benefits or property rights;
- participants cannot routinely control the work of the crypto fund manager, but they have the right to vote.
If an ICO is created to finance a company, the rights attached to it can fall under the definition of security. It is a share and it allows buying a stake in the future.
How to open a cryptocurrency business in Australia
To open a cryptocurrency company in Australia in 2022, contact IT-OFFSHORE experts.