Bitcoin Will Avoid “Double Taxation” In Australia
By Anthony Jerdine | March 25, 2016
In an attempt to boost Australia’s fintech sector, the government recently announced its commitment to resolve the issue of “double taxation” of digital currencies. The government’s stance was expressed by Hon Scott Morrison MP, Treasurer of the Commonwealth of Australia, who reportedly said, “We will ensure access to concessional tax treatments for venture capital investments in fintech firms, will take action to prevent the double taxation of digital currencies – we won’t be taxing digital currencies.”
Under the current regime, bitcoin and other crypto-currencies are treated as assets for capital gains tax purposes, making them more like a barter arrangement. Thus digital currencies aren’t considered to be money or foreign currency by the Australian Tax Office (ATO). According to the taxing authority, “Bitcoin payments made to you by customers will become part of your taxable income. You may also be charged GST when receiving Bitcoin in return for goods and services.”
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The tax treatment of bitcoin by the ATO has dissuaded many bitcoin and blockchain related start-ups to setup business and operations in Australia.
Recognizing the necessity of a proper policy response to the adoption of digital currency, the Government has issues a report that reads, “The government recognizes that that the current treatment of digital currency under GST law means that consumers are ‘double taxed’ when using digital currency to buy anything already subject to GST. The government is committed to addressing the ‘double taxation’ of digital currencies and will work with the industry on legislative options to reform the law relating to GST as it is applied to digital currencies.”
Further, the government is considering applying Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) laws to digital currencies during its review of the AML/CTF Act due to be released this year. This will improve banking access for virtual currency companies and will push the development and adoption of digital currencies. The Government backed Australian Securities Exchange (ASX) has vowed to explore the blockchain technology and post-trade solutions for the Australian equity market.
The proposal of removing of “double taxation” on digital currencies and covering them under AML/CTF laws will push adoption and growth of virtual currencies and related ventures in Australia. The tax treatment and stance on virtual currencies is a part of a bigger initiative which the government is looking to undertake. Overall, the Australian government is looking to boost the fintech sector in its economy, which “will have an important role to play in Australia’s innovation future.”
Bitcoin Will Avoid “Double Taxation” In Australia |