Australia’s 2017 federal budget is (finally) putting an end to the double taxation of digital currencies like bitcoin as a part of a wider FinTech-forward agenda by the government.
The double taxation of digital currency-related transactions in Australia has shuttered promising startups and frustrated the FinTech community over the years.
The cryptocurrency is seen as an intangible property rather than a money instrument under existing laws that dictate a double tax on digital currency-based payments.
“The Australian Taxation Office’s (ATO) original ruling, ostensibly the only valid interpretation of existing laws, resulted in a double tax on bitcoin. e.g If you pay $4 in bitcoin for a coffee, you will pay 40c GST for the coffee, and 40c again for the bitcoin you used to pay for the coffee,” explained Daniel Alexiuc, CEO of Brisbane-based bitcoin startup Living Room of Satoshi in an earlier conversation with CCN.
The tax treatment of digital currencies can be seen in an official policy reveal by the Australian Taxation Office here. “The ATO’s view is that Bitcoin is neither money nor a foreign currency, and the supply of bitcoin is not a financial supply for goods and services tax (GST) purposes,” read the policy, last updated in December 2014. That legislative stance is about to change.
A full year after revealing its intention to exempt the double taxation of digital currencies during its 2016 budget, the Australian Government Treasury is at long last enforcing legislation to remove the double goods and services tax (GST).
In its announcement, the Australian Treasury wrote:
From 1 July 2017, purchases of digital currency will no longer be subject to GST, allowing digital currencies to be treated just like money for GST purposes.
“The Government will make it easier for innovative digital currency businesses to operate in Australia,” the official statement added in its embracing stance.
Bitcoin usage is gaining traction in Australia and that growth is certain to get a boost in July as digital currency transactions become cheaper and gain parity with fiat money transactions.
Featured image from Shutterstock.
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