The Australian Government has confirmed crypto currencies will continue to be excluded from foreign currency tax arrangements following a major announcement overseas.
The decision follows a move by El Salvador to allow Bitcoin as legal tender.
Treasurer Jim Chalmers and Assistant Treasurer Stephen Jones said the decision had the potential to create uncertainty about the status of Bitcoin and other crypto assets for tax purposes in Australia.
The government will move to legislate the current tax arrangements, meaning crypto assets will not be regarded as foreign currency for tax purposes in Australia.
Capital gains tax will continue to apply to crypto assets held as investments.
The legislated changes will be backdated to July 1 last year.
“This gives certainty and clarity at a time of volatility for crypto currencies,” Mr Chalmers and Mr Jones said.
“The government will continue to take a pragmatic and timely approach to its role in the rapidly evolving digital currency landscape.”
It’s been a nightmare few months for cryptocurrency investors, with billions being wiped off the markets.
But there are warnings it’s about to get a whole lot worse.
The crypto winter has now turned into a “polar vortex”, a senior executive at one of the world’s largest banks said in a blunt admission this week.
For the entire year, cryptocurrency has been enduring a bear run.
However, last weekend things took a turn for the worse as investors panicked following the US central bank hiking the interest rate by 75 basis points.
It prompted fears a global recession and crypto investors quickly retreated, casing a mass sell off and a drastic drop in price for some of the world’s top-ranked blockchains.