According to an Australian parliamentary committee, bitcoin is not a financial product yet. Based on their recommendation, the federal government should hold off on classifying cryptocurrencies as products that are subject to taxation.
This parliamentary committee was created in October last year to investigate developments and applications of bitcoin and whether or not it should be covered in a range of regulatory issues such as taxation. However, the committee noted that bitcoin can be used for GST purposes.
Bitcoin and Taxation
With that, the government could maintain its wait-and-see stance in assessing its next moves when it comes to bitcoin regulation. The committee mentioned in its report that such regulation would be premature and could stymie the digital currency industry’s development in Australia.
Furthermore, the parliamentary committee recommended that the government should create a task force with the goal of monitoring developments in the field. This group could continue to investigate the opportunities and risks in using digital currencies and among bitcoin companies.
If these findings are accepted by the government, bitcoin would likely be exempted from any form of regulation included in the Corporations Act.
“I think the difficulty in regulating the trading platforms like traditional markets is that the compliance obligations that are associated with running a traditional financial market are quite high. The bar is set quite high,” said Australian Securities and Investment Commission (ASIC) senior executive Michael Sadaat. “I think it is likely that if you were simply to apply the existing framework to platforms that sell digital currency, most would find it uneconomic to sustain in Australia. And because the market for these bitcoins is global, a lot of that activity would move offshore and Australian consumers would probably still end up being able to speculate with digital currency by buying and selling on foreign trading platforms.”