First step forward for tax and crypto: Final Report from the Select Committee on Australia as a Technology and Financial Centre
While cryptocurrency- and blockchain-related taxation issues have been on the Commissioner of Taxation’s radar since at least 2014, to date there have been no changes to taxation laws to address many of these issues.
For example, issues arising from crypto-to-crypto transactions triggering a taxing point have been ventilated ad nauseum. More recently, these issues have been exacerbated through the rise in popularity and adoption of decentralised finance (DeFi) products, non-fungible tokens (NFTs) and related technologies.
The recommendations that are found in the Final Report from the Select Committee on Australia as a Technology and Financial Centre that was released late last week, attempt to address a number of these issues, among other non-tax related issues, in an efficient and well-reasoned manner.
The key tax-related recommendations from the Final Report are as follows:
- taxing point – the committee recommends that the Capital Gains Tax (CGT) regime be amended so that digital asset transactions only create a CGT event when they genuinely result in a clearly definable capital gain or loss.
- mining – the committee recommends that the Australian Government amend relevant legislation so that businesses undertaking digital asset 'mining' and related activities in Australia receive a company tax discount of 10% if they source their own renewable energy for these activities.
- DAO – the committee recommends that the Australian Government establish a new Decentralised Autonomous Organisation company structure.
The recommendations distil the numerous submissions made to the Committee, and it is worthwhile to note that the Final Report contains more detailed and nuanced solutions to the issues which are addressed by the recommendations.
The recommendations are welcome, and are a clear reflection of the diligent work of advocates in the crypto, blockchain and digital asset community.
It is hoped that Government will move fast to take up the recommendations, so that Australia can become a leader in the digital asset space. It will be interesting to see whether the Government will adopt a cautious ‘black letter’ approach to any legislative change or will look to implement the recommendations in a manner that will cater for future developments in the cryptocurrency and digital asset space.
 See, for example, TD 2014/25, TD 2014/26, TD 2014/27 and TD 2014/28.
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