Australia is one of the prime growth markets for binary options trading. Lately there has been a surge in interest from people in Australia in everything that has to do with binary options in Australia, including searches on the rules, regulations and tax policies on earnings from binary options trading. For all those interested in binary options in Australia, our staff has put this article together so you can get the basic information you need to start trading and comply with your local laws once you start profiting.
Recommended Binary Options Brokers for the Australian Market
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First and foremost, it is important to convey to the public in Australia that binary options trading is legal there. There are certain rules that apply to this kind of investment though, but these are mainly tax related. On the regulatory side, after going through a lot of information online, our team found that Australians mostly trade through brokers that are either regulated in Europe or are widely popular in Europe.
Binary options regulations in Australia however, fall under the jurisdiction of ASIC. ASIC stands for Australian Securities and Investments Commission. This regulatory body is in charge of financial regulation all around, and binary options in Australia are considered to be a financial instrument. Any aspiring Australian binary options trader, should check the regulatory environment in Australia to further understand what to expect. In any case there are very few ASIC regulated binary options brokers, because Australia is a much smaller market than Europe or the USA, where most of the regulated brokers are based.
In order for a binary options broker to be regulated in Australia, the broker must comply with unique requirements which are not necessarily the same in Europe or in the US. Some of these requirements include:
- The broker must have at least $1million in assets
- The broker must segregate client funds
- The broker must comply with know your client procedures (KYC)
- The broker must comply with anti-money laundering procedures
Brokers that are regulated elsewhere must comply with many of the same rules, although there are always specific rules, regulations and laws that apply to only one country. That is why most regulated binary options brokers actually seek European regulation, since once they are regulated in one of the EU member countries, that regulation is automatically compatible with the regulation in all other member countries.
There are also many unregulated binary options brokers that have been working for years. Some are just only applying for licenses under the jurisdiction of certain regulatory bodies, a process which takes time. This is why trading with an unregulated broker is not necessarily a bad idea or illegal either. In Australia, the main concern has to do with taxing the earnings from binary options trading. That is the most important legal question for Australians that aspire to become binary options traders.
Australians should know that the ATO – Australian Tax Office – does require traders to report their earnings from binary options trading, in order to levy a tax on it. Profits from binary options trading will likely be considered under capital gains tax laws. However, Australian traders are advised to check the precise tax declaration requirement relevant for the territory in which they live, for profits derived from binary options trading.
Once you have checked all the necessary tax requirements and you are ready to start trading, it is necessary that you do so through a recommended binary options broker. Here is a list of our recommended binary option brokers for the Australian market. Some of them even offer Australian traders a demo account so that they will get acquainted with binary options trading before they start risking their own money. Remember, read the reviews, choose a recommended broker and make sure that you declare your profits. This is the best way to make sure you will enjoy the full benefits of trading binary options in Australia.