Australian Cryptocurrency Regulation: A Comprehensive Guide

Australia has introduced a licensing regime for digital currency exchange providers. Obtaining an AUSTRAC license is mandatory for such companies.

A licensee may be an individual, business or organization that conducts the following exchange:

If you plan to provide cryptocurrency services, you must be registered with AUSTRAC before you can carry on such activities. It is illegal to provide cryptocurrency services in Australia without registration.

Obligations for licensees:

Following information is required for obtaining cryptolicense:

• the services that business provides
• the structure of business
• contact details for business
• the names and contact details of key personnel in business, such as directors and officeholders
• an official police document for each of the key personnel in business (acceptable documents - National Police Certificate, foreign equivalent of a National Police Certificate, National Police History Check)
• financial statements for the most recent financial year
• registration numbers such as an ABN or an Australian Company Number (ACN)
• registration details if business is registered in a foreign country
• any criminal, civil or enforcement action relating to business and key personnel

The Australian Taxation Office (ATO) provided guidelines on how cryptocurrencies are taxed. Cryptocurrencies are generally treated as property for tax purposes.

Capital gains tax (CGT) may apply to the disposal of cryptocurrencies and individuals are required to report such transactions in their tax returns. The CGT rate in Australia is generally equal to the individual's marginal income tax rate, and it applies to the capital gain made on the disposal of assets.

Personal income tax (PIT) vary based on income levels, with the rates ranging from 0% to the top marginal rate of 45%:

Tax rates 2023–2024

1) 0 – $18,200 – 0%

2) $18,201 – $45,000 - 19% for each $1 over $18,200

3) $45,001 – $120,000 - $5,092 plus 32.5% for each $1 over $45,000

4) $120,001 – $180,000 - $29,467 plus 37% for each $1 over $120,000

5) $180,001 and over - $51,667 plus 45% for each $1 over $180,000

Corporate income tax (CIT) - every corporation is liable to a federal tax rate of 30% on their taxable income, except for businesses categorized as 'small or medium' enterprises. These entities enjoy a discounted tax rate of 25%. However, this reduced tax rate is applicable solely to companies that, in conjunction with specific 'connected' entities, remain below the combined turnover limit of AUD 50 million.

Goods and services tax (GST) is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia.

Additionally, Australia does not have a Value Added Tax (VAT) system. Instead, it uses the GST system, which is similar to VAT systems in other countries.