Australia has made a definite tax decision when it comes to crypto assets, and industry members and active traders are not happy about it.
Australia may have made an extreme choice when it comes to cryptocurrency
Not long ago, Australia announced that, for tax purposes, it would continue to treat digital currencies as physical assets rather than foreign currencies. The Australian government is now preparing to introduce full legislation supporting the decision. What does this mean? Well, it means that all investors in the country who sell their assets at a profit will pay capital gains taxes, and these are often rather expensive.
Australia bases its decision largely on how El Salvador handles bitcoin. In the summer of last year, the Central American country announced that bitcoin would be treated as legal tender. It can be used in conjunction with the US dollar, and people can go to any store or business and buy goods and services with BTC.
The experiment is now, in many ways, a failure, as bitcoin has suffered massive losses over the past 12 months. Initially, the coin was trading at a new all-time high of around $68,000 per unit last November, though the asset is now trapped in a low $20,000 range. Thus, it can be said that El Salvador has lost a great deal of support over the past year, and many individuals within the country do not want to be forced into bitcoin any more.
When examining the situation surrounding El Salvador, regulators in Australia believe that bitcoin cannot take on a legitimate form of currency. Thus, it is equivalent to an asset or a commodity that one trades in, and in so doing, the people themselves will be subject to various taxes and fees.
The news likely stems from Australia’s secretive decision to future-test bank-issued digital currencies, says Mitchell Travers, a former crypto exchange operator and founder of blockchain consulting firm Soulbis, and the country probably doesn’t want any competition, he said. He stated in an interview:
It would be unadvisable for the government to actually take an enforcement approach to taxing crypto assets in their early stages, especially [because] The Treasury is also investing in trying to migrate the traditional technology systems that underpin our financial system toward digital assets. It would be a ludicrous divisiveness if they were to tax digital assets and then release their digital currencies to their digital banks without clear definitions of what a token equals to any tax treatment.
Build everything on El Salvador
Caroline Bowler – CEO of BTC Markets – further stated:
I think they are taking a snapshot in time and making a long time assessment on what happened in El Salvador and the price of bitcoin. The Europeans will step in, the UK now has a prime minister who is knowledgeable about central bank digital currencies.