The Australian government has finally released an official response to a review by the Board of Taxation on how digital assets will be taxed, one of the hottest topics in crypto news today . The good news is that there are no new crypto-specific tax laws as of yet, but something may be coming in the not-too-distant future.
This isn’t a distinct green light for investors, however. There are signals that a shift toward increased ATO oversight and stricter guidance is one the horizon. There is a lot of ground to cover in the wake of the Australian Treasury’s response, so let’s get into the thick of it.
Implications of Australia’s Stricter Crypto Tax Rules
There are a few key points that will matter for crypto builders, investors, and anyone that plans to operate within the country’s digital asset space. Let’s look at the focal points of the official response.
1. Compliance Still Matters Despite No New Laws
There doesn’t seem to be any indication of new cryptocurrency tax legislation coming from the Australian government anytime soon. It is also important to know that current rules relating to GST, income tax, and capital gains tax will continue to apply. For those seeking tax reform in the aforementioned areas, it is surely a disappointment.
The Board of Taxation did identify that these are the areas in greater need of guidance, especially when it comes to how bridging, DeFi, and wrapping are taxed. The board is continuing to apply a “wait and see” stance instead of implementing new rules that would consider the nuances that crypto has.
Those who are staking, trading, working with NFTs, or are simply active in the DeFi space will have their activity remain taxable. The Australian Treasury Office will continue to try to interpret that activity under the current set of laws, so make sure to maintain accurate reporting.
2. Key Principles Driving Future Changes
One of the key things worth noting is what the Australian government has endorsed as far as framework. That framework is what will eventually guide changes to the crypto tax code, and it will be built around four key principles.
The first is neutrality. This will see cryptocurrency treated in the same manner as traditional assets. The second will be simplicity, making the rules both clear and manageable. The third will be integrity which will work to reduce the number of loopholes possible and prevent evasion. Finally, there is competitiveness, which will help Australia stay in line with its global peers in the cryptocurrency space.
3. The ATO is Taking the Lead
The Australian Tax Office (ATO) will be standing front and center for the time being as it pertains to tax clarity. A crypto group will be formed that will offer consulting within the industry while also publishing new general guidance.
The ATO has already been providing guidance through its website for a few years now, but there have been no public rulings in the space of crypto tax for more than a decade. That alone leaves things long overdue for change. Clearer rules should be coming and there will be fewer excuses. Those not keeping accurate records from their chains and wallets will need to do so now.
4. No Concessions or Carve-Outs
There have been no proposed tax breaks or startup exemptions as of yet. If anything, the Australian government is taking a compliance-first approach that is a bit more cautious, especially compared to other jurisdictions.
The ultimate goal is to provide better protection within the cryptocurrency space for consumers. Innovation will remain a driving factor, but the Australian government is really putting a focus on consumer protection first and foremost.
5. Specific Areas of Focus
There are specific areas of focus that the government has flagged for future review. There aren’t any new rules in place as of yet, but they are considered areas of scrutiny that could see further governance in the not-too-distant future.
The ATO is expected to take the lead on issuing guidance in the areas of DAOs, DeFi, GameFi, and NFTs, in particular. Though there has been no official legislation in those areas as of yet, we may not be far off of substantial changes.
Major Crypto Growth in Australia
It is estimated that roughly 9.6% of Australians already own some form of digital asset. Some experts believe that the new rules will help foster further adoption by Australians. The largest crypto exchange in Europe, WhiteBIT, recently announced that it is making the move into the Australian market.
Despite its complexity, WhiteBIT noted that Australia was “an attractive landscape for crypto businesses.” Swytfx, one of largest exchanges in Australia, made a major move in March to acquire the largest crypto exchange in New Zealand, making the merger the second-largest exchange in Australia when measured in trade volume.
Alexander Jader, the professor of Digital Business at the Open Institute of Technology, said in an interview, “Australia’s new regulatory framework is akin to rolling out the welcome mat for cryptocurrency exchanges. The clarity provided by these regulations is set to attract a new wave of entrants.”
New Crypto Regulations
In a statement made on March 21, the Australian Treasury Department said that custody services and crypto exchanges will be classified under similar rules compared to other financial services in Australia.
“Our legislative reforms will extend existing financial services laws to key digital asset platforms, but not to all of the digital asset ecosystem,” noted the Treasury in a statement.
The idea behind the move is imposing similar regulations compared to other financial services in Australia. That pertains to financial licensing, safeguarding customer assets, meeting minimum capital requirements, and more.
With the federal election coming on May 17, the proposal comes as part of current Prime Minister Anthony Albanese’s center-left campaign. The opposition party led by Peter Dutton is also vowing to make crypto regulation one of the top priorities should his party win.
Crypto Firm Fines
These rules don’t come unprovoked. A recent wave of crackdown actions have been taken on Australian crypto firms, helping to spur the move to change. In December 2024, Bit Trade, which operates Kraken in Australia, was hit with an A$8 million ($5.2 million) fine by the Australian Securities and Investments Commission (ASIC). Courts found that Bit Trade unlawfully provided “margin extension” products to more than 1,100 customers despite lacking the correct compliance.
Margin trading is when funds are borrowed to increase trading exposure. Significant risk comes with margin trading, including substantial financial loss. The Chair of ASIC, Joe Long, said the penalty was “significant” and claimed that it should be a reminder to digital asset firms that regulatory compliance obligations are critical.
Final Word
Though nothing formal has been passed down, this is an important step for Australian crypto. With a greater focus on customer protection and clarity of rules, this could be but a stepping stone before we see official laws passed regarding the cryptocurrency space in the near future.
