Bali police deputy spokeswoman Sri Harmiti said the 46-year-old would likely be charged with drug possession, which carries a maximum penalty of 10 years in jail and a substantial fine.
About 0.4 of a gram of heroin was allegedly found inside his motorcycle helmet when he was arrested in Kuta a week ago.
"He was arrested while he was driving a rental motorbike," Ms Harmiti said.
She said the man had admitted buying the drugs from a woman.
Ms Harmiti said the man, identified only by his initials FBM, said he'd been a regular user of heroin.
"He said that as a fisherman he needed to consume heroin to increase his stamina and self-confidence," she said.
Several Australians caught with drugs in Bali have used the defence that they were addicts in order to escape with more lenient jail terms.
Ms Harmiti said the man had been on a two-week holiday to Bali, his first to the resort island.
His arrest comes just weeks after a Perth man was arrested on the island, allegedly for hashish possession. He's yet to face court.
Former British and European champion boxer Jamie Moore has been shot in
Marbella
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Former British and European champion boxer Jamie Moore has been shot in
Marbella - apparently in both legs.
Moore, the former European light-middleweight...
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