Aussie Federal Budget Says Bitcoin Won’t Be Taxed Like A Foreign Currency
The first federal budget under Anthony Albanese’s administration said that Bitcoin (BTC) will continue to be considered a digital asset and will not be taxed as a foreign currency.
The government budget was presented on October 25 and said that Bitcoin would be subject to the existing tax treatment of digital currencies, including capital gains tax treatment if held as an investment.
According to the budget document:
“This measure removes uncertainty following the decision of the Government of El Salvador to adopt Bitcoin as legal tender and will be backdated to income years that include 1 July 2021.”
This explanation follows El Salvador‘s acceptance of Bitcoin as legal money in September of last year, with the Australian government effectively ruling out a change in categorization even though it is used as a currency in El Salvador and the Central African Republic.
Bitcoin investors will be liable to capital gains tax obligations if they earn from the sale of a digital asset under the definition of a digital asset.
Profits are normally included in one’s income tax at a maximum rate of 45%, so the percentages vary. However, if the item has been held for more than a year, investors obtain a 50% tax reduction from a capital gains tax event.
In comparison, the overall tax rate on income from foreign currency investment is 23.5%, which would represent significant savings to investors if BTC were classified in this category.
Central bank digital currencies (CBDCs) are government-backed currencies that will be subject to foreign currency rules.
The Reserve Bank of Australia (RBA) issued a white paper in late September presenting a strategy for a CBDC pilot project named eAUD in collaboration with the Digital Finance Cooperative Research Centre (DFCRC).
The pilot report is likely to be issued in the middle of next year, and the RBA will be in charge of eAUD issuance, while the DFCRC will oversee platform development and installation.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
Join us to keep track of news: https://linktr.ee/coincu