Australians who buy and sell cryptocurrencies stand to make more money with a major legislator declaring that they should get tax breaks on their astronomical gains under a new licensing system.
Investors who buy Bitcoin, Ethereum, Binance Coin and Dogecoin already pay capital gains tax when they relieve the asset, and sometimes they get stuck.
Bitcoin in less than 18 months has risen from $ 13,000 to more than $ 81,000 with some huge declines along the way.
The volatile nature of cryptocurrency trading means that a person who is unable to determine what their digital asset was worth when they bought it is taxed on the market value of Australian dollars at the time of sale.
This means that investors may end up paying a large capital gains tax if they were not able to correctly calculate their cryptocurrency gain.
To address this issue, a Senate Financial Technology Committee recommends that cryptocurrency investors pay a capital gains tax only if the transaction actually results in a definable capital gain or loss.
Liberal Senator Andrew Bragg, who chaired this committee, said cryptocurrency investors often paid too much tax.
Australians who buy and sell cryptocurrencies may end up paying less tax under proposed new laws. Investors who buy Bitcoin (stock image, image), Ethereum, Binance Coin and Dogecoin already pay capital gains tax when they relieve the asset and sometimes they get stuck
“We have also recommended a capital gains tax reform to lower the tax burden in some cases – honestly, people are paying taxes they should not be paying,” he told the Daily Mail Australia.
‘I’m more interested in lowering the tax than raising the tax.’
While Australians can buy cryptocurrencies on trading platforms or trade directly with other cryptocurrencies, the Senate committee has recommended new rules requiring cryptocurrency platforms to be licensed by the Federal Ministry of Finance so that an Australian company can be held liable.
“We have recommended that there should be a market licensing structure so that Australians could use an Australian resident market,” Senator Bragg said.
Senator Bragg used his performance at a Finder breakfast in Sydney on Tuesday morning to slam the major banks for de-banking practices, in which bank accounts have been closed to stop digital currency exchanges.
‘I’m just over it. I just think that the banks are behaving like a cartel and that they are abolishing people who are legitimate companies because they are competitors, ”he said.
To address this issue, a Senate Financial Technology Committee recommends that cryptocurrency investors pay a capital gains tax only if the transaction actually results in a definable capital gain or loss. Liberal Senator Andrew Bragg, who chaired the committee, said cryptocurrency investors often paid too much tax (pictured right with former New South Wales Prime Minister Gladys Berejiklian in Paddington, Sydney);
There will be changes in cryptocurrency
1. Crypto licenses: The Australian Government establishes a licensing scheme for digital currencies under the Treasury
2. Tax relief: Cryptocurrency investors only pay capital gains tax where there is a definable capital gain or loss
3. Central Bank of Crypto: Treasury maps digital tokens and reviews the idea of establishing a digital central bank currency in Australia
Source: Recommendations from the Senate Committee on Australia as a Technology and Finance Center
Senator Bragg was harsh on the big banks for trying to undermine that kind of purchase now, pay later juggernaut Afterpay, only to create their own purchase now, pay later app.
“There is no doubt that the banks behaved in a restrictive manner during the fintech investigation,” he told the Daily Mail Australia.
‘They wanted to repeal new ideas and new competition. I do not think it is a good policy to make the Australian people dependent on larger institutions.
‘Eighteen months ago, they were much more focused on trying to put forward ideas to the committee that would hamper the development of purchases now, pay later.
‘What I do not think we should do in Canberra is close opportunities for people who do not want to have a credit card.’
Stock trading platform Superhero co-founder John Winters told the Breakfast that the Australian Securities Exchange had threatened to delist companies entering into cryptocurrency trading.
Senator Bragg said that although he was not aware that it was a permanent policy, this practice was anti-competitive.
‘If it were, I would be very worried.
“They’re closing a door on innovation, which would actually turn the ASX into a stalemate, and that would hurt the economy,” he said.
‘There would be considerable concern about it in Canberra.’
The Senate Committee has recommended giving the Australian Financial Complaints Authority the power to investigate “de-banking” episodes.
Australian Banking Association chief executive Anna Bligh, a former prime minister of Queensland Labor, said banks had to comply with anti-money laundering laws.
“Any hint of cartel behavior on the part of banks in Senator Bragg’s committee is completely unfounded,” she told the Daily Mail Australia.
Senator Bragg was crushed by the big banks for trying to undermine that kind of purchase now, pay later juggernaut Afterpay, only to create their own purchase now, pay later app (pictured is Afterpay’s billionaire co-founder Nick Molnar with New York with the actress Noami Watts)
The Australian Stock Exchange denied that it was against cryptocurrency and argued that it should be cautious, even though Bitcoin has been around since 2009.
‘ASX is not’ anti-crypto ” and does not issue threats, ‘a spokesman told the Daily Mail Australia.
‘XX has acknowledged ahead of the Senate inquiry that investors now see cryptocurrency assets as “mainstream”.
‘We have been deliberately wary of cryptocurrencies since 2017, when Australia’s first initial coin offering took place.
‘Many proposals involving digital assets that came to ASX between 2017 and 2019 were not suitable for listing.’
A Finder online survey of 1,000 people found that 31 per cent of Generation Z consumers, born from 1995 onwards, owned cryptocurrency compared to one in six Australians across all age groups.
Cryptocurrencies have not been universally embraced in the Liberal Party with Finance Minister Jane Hume urging potential investors to be cautious (she is pictured next to right with Prime Minister Scott Morrison, Senator Bragg, Victorian Senator James Paterson and Treasurer Josh Frydenberg)
Contrary to many people’s beliefs, the Australian tax office can track cryptocurrency transactions.
Telephone companies legally known as Australian data service providers supply the tax office with cryptocurrency transactions.
In May, Bitcoin dived from $ 74,000 to $ 50,000, leaving investors exposed if they bought in the middle of the hype instead of in June 2020, when Bitcoin was worth only $ 13,000.
The world’s most valuable cryptocurrency lost 16 percent of its value in one day after Tesla’s billionaire founder Elon Musk declared he would no longer accept Bitcoin as payment for his electric vehicles.
He argued that cryptocurrencies were ‘mined’ using high-powered computers that require fossil fuel energy to continuously solve mathematical arithmetic problems.
Bitcoin plunged another 19 percent a week later after China’s Communist Party government announced it would ban cryptocurrency transactions.
In May, Bitcoin dived from $ 74,000 to $ 50,000, leaving investors exposed if they bought in the middle of the hype instead of in June 2020, when Bitcoin was worth only $ 13,000. The world’s most valuable cryptocurrency lost 16 percent of its value in one day after Tesla’s billionaire founder Elon Musk declared he would no longer accept Bitcoin as payment for his electric vehicles
Bitcoin has since been recovered to be worth more than $ 81,000, with El Salvador in September becoming the first country in the world to legalize Bitcoin as a legal tender.
Cryptocurrencies have not been universally embraced in the Liberal Party with Finance Minister Jane Hume urging potential investors to be cautious.
“They are volatile and high-risk assets, and investors need to be aware of these risks,” Senator Hume told the Sydney Brokers ‘and Financial Advisers’ Association Conference in May.
Existing tax rules allow Australians who lose on investments, including shares, to claim this loss against their capital gains, but not their taxable income.
Australians can only claim this loss against the capital gains they achieved in 2020-21 by selling shares, real estate or cryptocurrency.