The federal government has announced plans on Monday to remove the ‘double tax’ treatment from those dealing in digital currency such as bitcoin.
In its report [PDF] Backing Australian FinTech, the government said it recognises that that the current treatment of digital currency under the Goods and Services Tax (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,” the statement says.
According to the government, blockchain technology — the underlying technology behind Bitcoin — has attracted considerable interest, adding it is currently being applied to a number of areas within the international financial system. The government believes the technology has the potential to revolutionise key services like international transfers between banks, equities clearing, and settlement, and financial contracts.
Currently, the government said there are over 600 digital currencies available, with different protocols for transaction processing and confirmation, as well as different approaches to the growth in the supply of digital currency units.
It said that removing the