On 21 March 2025, after years of industry anticipation, the Australian Government finally issued its response to the Board of Taxation’s comprehensive review of the taxation of crypto-assets. The Board, which undertook extensive consultations across tax professionals, academia, and the crypto industry, delivered its 295-page report to the Government in February 2024. The Government’s response? A comparatively humble four page response.
Background
The review began in December 2021 when the former Treasurer tasked the Board with evaluating how Australia taxes digital assets. The aim was to assess whether existing tax laws adequately covered crypto transactions, whether Aussie businesses and investors understood their tax compliance obligations, and how international approaches to crypto taxation could assist in informing domestic policy.
A working group, comprising Board members, tax experts, and officials from The Treasury and the Australian Taxation Office (ATO), led the review. Consultations began in 2022, with key stakeholders (which included crypto-asset exchanges, software providers, developers, and investors) providing submissions. The result was a dense, detailed report exploring almost every facet of crypto taxation and its implications.
To briefly summarise the 295-page report, the Board opinion is that crypto-asset taxation could sufficiently be dealt with under the existing regime and that bespoke legislation would be ill-placed as blockchain remains in its infancy. This approach contemplates only the issuance of further ATO guidance where required and the establishment of a Working Group to help collate existing guidance for tax payers.
The Three Key Recommendations
As expected, the Government’s response largely avoids committing to significant legislative change (as suggested by the Board's report). Rather, it agrees with three key recommendations.
1. The ‘Principles Framework’ for Crypto Taxation (Recommendation 5.1)
The Principles Framework developed by the Board promotes certainty, simplicity, integrity as well as competitive, revenue, technological and functional neutrality. It also ensures that the tax treatment of crypto assets and transactions should be based on existing ordinary tax principles, unless there are unforeseen or unintended outcomes. The Board recommends that the Principles Framework be used as a guide by the Government, when considering the suitability of amendments to current Australian taxation laws and/or any amendments to or creation of a new tax legislation for crypto assets and transactions. In assessing any proposed measure by reference to the Principles Framework, all relevant factors should be considered. This may include features of the crypto ecosystem that give rise to risks and integrity concerns (see Chapter 4). For example, neutrality in principles 3, 4 and 5 needs to consider the inherent integrity risks that exist for crypto assets that do not exist for other traditional assets including cash, shares and property.
Frustratingly, the report cites the common regulatory refrain of “technology neutrality” to defend the status quo when the application of existing principles are designed based on existing economic and trading paradigms which incentivise or disincentive particular activities. Rather than read across from existing laws, this response posed an opportunity to consider changes that would enhance the development of Australia’s digital asset industry, enhance productivity and attract new business.
Meanwhile, the so-called “inherent integrity” risks of crypto-assets are not addressed or explained.
2. No Crypto-Specific Tax Laws (Recommendation 13.1)
Some options for crypto-specific legislative taxation regimes were raised with the Board during consultations. The Board does not recommend the introduction of any crypto-specific legislative taxation regime at the present time, when the crypto ecosystem is changing and developing rapidly. Even if the crypto ecosystem was more settled, a crypto-specific legislative taxation regime could raise issues such as ensuring confined and applicable definitions, acting contrary to neutrality, potential integrity concerns, increased complexity and barriers to entry for a developing market. Should the Government decide to explore the suitability of introducing a crypto-specific legislative taxation regime at some time in the future, the Government may decide to consider one or more of the options identified in this Chapter 13, which were the subject of varying levels of discussion during the Review. Should the Government decide to consider any of these options in the future, the Board recommends that the Government undertake further consultation with key stakeholders and a further detailed review in relation to any option that it might consider.
3. Further Review of Emerging Crypto Sectors (Recommendation 13.2)
The Board’s stakeholder consultations together with its own research indicates that areas in the crypto ecosystem that are currently increasing in scale and developing at a particularly fast rate are Decentralised Autonomous Organisations (DAOs), Decentralised Finance (DeFi), Gaming Finance (GameFi), and Non-Fungible Tokens (NFTs). The Government may like to consider undertaking further work in relation to the taxation implications of these four areas in the future particularly in light of any policy responses made to the regulation of such activities. In the meantime, the Board recommends that the ATO continue to consider the tax treatment of new and evolving crypto assets and transactions in accordance with existing rules and principles, including in relation to these four areas.
A ‘Wait and See’ Approach
For those hoping for substantial reform or tailored crypto tax legislation, the Government’s response will come as a disappointment (but to be fair - this effectively echoes the Board's report which recommended holding off on crypto-asset specific legislative reform given blockchain is still in its infancy). The overarching theme of the reply (and the Board's report) is that existing tax principles apply, and while future discussions might take place, there is no immediate appetite for dedicated crypto tax laws.
The timing of this response is no coincidence. Australia is on the brink of a Federal election, which is expected to be called any day now. With political attention focused elsewhere, comprehensive tax reform of crypto-assets is unlikely to be a government priority in the near term. For businesses and investors in the digital asset space, this means navigating crypto taxation under existing frameworks, with the ATO continuing to apply general tax principles rather than bespoke crypto regulations. The applications of these principles to novel situations like wrapping or staking tokens can lead to surprising and onerous tax obligations which create obstacles to the development of the technology.
Final Thoughts
The Board of Taxation’s exhaustive 295-page report and the Government’s concise response underscores the cautious approach being taken. While this avoids hasty, ill-conceived legislation, it also leaves many questions unanswered about how Australia will tax newly emerging crypto technologies (or other technologies should they arise) in the future. After a four review year, it appears that industry and tax payers will have to wait a little longer for more guidance on key areas identified in the report. For now, the message is clear: the Government is in no rush to make sweeping changes. This cautious approach is likely to hinder Australia’s position as a leader in blockchain innovation, leaving tax payers to grapple with uncertainty, and likely lead to tax disputes as the application of existing principles to new facts is tested.
Written by Luke Higgins and Steven Pettigrove
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