On Tuesday, the Australian government under Anthony Albanese, the serving prime minister of the country, presented its first federal budget, which also highlighted the country’s stance on cryptocurrency.
Earlier this year, the newly elected Australian government announced its intention to regulate the country’s crypto industry. It had also shown interest in conducting a virtual assessment of the cause of it. However, the issue of regulating cryptocurrencies, which decentralized networks rather than central banks govern, has been debated in Australia for years.
The federal budget stated that Bitcoin will continue to be treated as a digital asset and will not be taxed as a foreign currency. Elaborating on the subject further, the budget stated that it would fall under the current tax treatment program for digital currencies, including capital gains tax treatment, which holds them as an investment. Bitcoin investors will be subject to capital gains tax requirements when they earn profits from the sale of it.
The digital asset categorization puts Bitcoin investors under a heavy tax category compared to the general tax rate for profits from foreign currency investment which is about 23.5%. This legislation proposing Bitcoin to be counted as foreign currency was proposed by the Treasury. However, to set the final details of digital asset taxation laws, a board of tax review on the tax treatment of digital assets is currently ongoing.
According to the budget, the CBDCs backed by the government will not have to comply with the foreign currency rules. The Australian CBDC recently has seen some developments, as in September, the Reserve Bank of Australia (RBA) announced their plan of action for their CBDC project called eAUD. It is expected to be released mid-next year.