Bitcoin has taken the financial markets by storm since it was introduced to the public in 2009. It has launched an entirely new asset class with multitudes of other cryptocurrencies following in its footsteps. Now, many investors in Australia are looking to capitalize on this exciting and lucrative asset market.
Buying Bitcoin in Australia From Exchanges
There are a variety of aspects for investors in Australia to consider when looking to buy Bitcoin from cryptocurrency exchanges. There are financial and regulatory laws which one should be aware of. Also, there are numerous exchanges available, each with their own advantages and disadvantages that you should be informed about. So, let’s take a look at all of this in more detail.
It is important to understand the legal implications and the relevant regulations if you are looking to buy Bitcoin in Australia. Most of the regulations you have to worry about are linked to the tax treatment of Bitcoin. There are tax consequences you should be aware of when acquiring or disposing of Bitcoin in Australia. Also, if you have dealt with a foreign exchange while buying or selling Bitcoin, you may have some tax liabilities in the foreign country.
If you are entitled to receive gains from the acquiring and then disposing of Bitcoin in Australia, you will be liable for paying capital gains tax. In the case of receiving foreign currency in exchange for Bitcoin, your capital gains tax liability will be calculated by converting the foreign currency received into Australian dollars (AUD). The market value for any property received in exchange for Bitcoin will be what is used to calculate the capital gains liability.
Opening its doors in 2013, CoinMama is now utilized by more than 2 million people in more than 188 countries. This exchange allows you to buy Bitcoin and other cryptocurrencies easily with a wide choice of secure options including credit cards, SWIFT or SEPA transfer.
Over 35 million investors in more than 100 countries use the CoinBase exchange which was launched in 2012. CoinBase enables businesses to accept payments in cryptocurrencies.
Launched in 2013, CoinJar is one of the most reputable exchanges offering access to the cryptocurrency markets.
This Australia-based cryptocurrency exchange provides you with an intuitive trading platform. CoinSpot provides traders with access to a large variety of cryptocurrency markets.
Founded in 2011 by Jesse Powell, Kraken is a popular cryptocurrency exchange. The platform provides access to a variety of cryptocurrency markets.
Founded in Sydney, Australia, Independent Reserve is a solid cryptocurrency exchange which provides traders with access to the Bitcoin market as well as other cryptocurrencies.
Buying Bitcoin in Australia From Brokers
Many investors prefer to use cryptocurrency brokers more than exchanges in order to obtain cryptocurrencies. What makes brokers advantageous is that you do not actually have to own the Bitcoin and other cryptocurrencies. Instead, with cryptocurrency brokers, you are essentially only making a prediction on the future direction of the markets. You will have access to a trading platform, usually with numerous technical analysis tools and charting features. This helps to boost trading analysis accuracy which leads to profitability.
Brokers use a price spread in order to make revenue to continue operations and maintain the platform. The profits earned by the broker is the difference between the price of buying and the price of selling Bitcoin or other cryptocurrencies. You will usually have a variety of banking methods available for depositing and withdrawing funds. Also, if you have any issues with using the platform, the broker will usually have a support team ready to help. They also offer a wealth of educational resources to help you on your trading journey.
Since being established in 1974 IG Markets became a well-respected cryptocurrency broker with more than 178,000 users worldwide. The broker also provides access to trading commodities as well as automated algorithmic trading.
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Launched in 2010, multitudes of traders have accessed the cryptocurrency markets and various other types of assets through Pepperstone’s trading platform. Pepperstone is now one of the most reputable brokers in the industry. They are based in Australia and are regulated by the ASIC.
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A trustworthy broker founded in 2005, FP Markets provides traders with access to Bitcoin and other cryptocurrency markets. FP Markets also has access to various other asset classes to trade such as stocks, indices, commodities and forex.
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In 2007, IC Markets was launched in Sydney, Australia by a group of market professionals with the goal of providing traders access to financial markets, such as cryptocurrencies.
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A U.K.-based financial markets broker, Plus500 supports access to trade for more than a million users. The platform provides over 1000 tradable assets and is listed on the London Stock Exchange
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The three founders of eToro launched the platform in January 2007 aiming to provide a dependable platform to trade the financial markets. Not only is Bitcoin available, but other cryptocurrencies, stocks and commodities can also be traded. This is considered one of the top social trading sites.
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Buying Bitcoin in Australia from an ATM
Many people are not able to or may not prefer to use cryptocurrency exchanges or even brokers. This is why there are various ATMs available around Australia which allow you to buy Bitcoin. These machines will allow you to purchase Bitcoin using cash. You can fill your cryptocurrency wallet which you can use to make transactions. Converting your cash into Bitcoin is fast and convenient with ATMs. Also, many people value the increased privacy of using an ATM to buy Bitcoin using cash. There are many available Bitcoin ATMs in Australia with the first Bitcoin ATM installed in Sydney’s Pitt Street Mall in 2014. On the east coast of Australia, there are 18 Bitcoin ATMs available from Cairns in the north to Sydney in the south, plus there are four Bitcoin ATMs across Adelaide. There are also 13 ATMs in the Victoria area with eight of these installed in the city of Melbourne and surrounding suburbs.
The following are some of the advantages and disadvantages of buying Bitcoin from an ATM in Australia:
Australia Tax Directive Bitcoins & Cryptocurrencies
It is important for investors in Australia to understand the laws and regulations that apply to the buying and selling Bitcoin and other cryptocurrencies. When you obtain and dispose of cryptocurrencies there are some tax liabilities you should understand. The liabilities will depend on the specifics of the situation. One can be liable for either income tax or capital gains tax.
One way that a transaction could be taxed is as income. This occurs if the transaction is done as a professional business activity, such as commercial cryptocurrency mining. Operating cryptocurrency-related enterprises will be counted as taxable income. Also, professional cryptocurrency trading is considered income and not capital gains.
When Does Australia Capital Gains Tax Apply to Bitcoin?
When buying and selling cryptocurrencies, you may be subject to income tax, as mentioned before, but you should also be aware of another type of tax. When you invest in Bitcoin and other cryptocurrencies, you will need to deal with capital gains tax liabilities in Australia. Once you dispose of Bitcoin and other cryptocurrencies, you will create a taxable event based upon the gains or losses from the event.
Holding cryptocurrency for investment purposes has several rules you should know about. First, you cannot claim a personal use asset exemption. On the other hand, holding the investment for 12 months or longer provides discounts on capital gains taxes. This is essential to understand since capital gains and income tax liabilities are taxed at different rates.
On the other hand, capital gains tax liabilities do not only apply to investments. Capital gains may be owed when you gift cryptocurrency. Even when you trade one cryptocurrency for another cryptocurrency or fiat currency, you may end up with some capital gains tax liabilities in Australia.
Australian Tax on Trading Bitcoin
It is important to note that the profit made from trading or investing in cryptocurrencies is determined in Australian dollars (AUD). This happens when you exchange cryptocurrency for fiat currency such as the US dollar and also when you exchange cryptocurrencies for goods and services. For example, if you buy or otherwise obtain 1 BTC when it’s worth $5,000, and then sell or spend it all when it’s worth $10,000, you would likely incur a $5,000 tax obligation at the moment you sold or spent it. All profits or losses are what get taxed.
What Tax Do I Pay If I Lose the Keys?
You should always take the utmost care of your Bitcoin private key and make sure it is safe and secure. On the other hand, life is unexpected, and anything can happen. Even if you are extremely careful and responsible, you can still end up losing your private key. Although this will result in you losing access to your Bitcoin, you can still take action to minimize losses. In Australia, if you happen to lose your Bitcoin private key, you can claim a loss on your capital gains tax liabilities for the value of the Bitcoins lost.
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