Australia Introduces Bitcoin Double Taxation Relief Billbr>
The Australian government has introduced a bill to remove double taxation of cryptocurrencies such as bitcoin. The bill will formally codify a ruling made earlier this year and will be retroactive to July 1 on transactions and supplies once passed by both houses of Parliament.
The Australian Tax Office (ATO) currently does not consider cryptocurrencies money for goods-and-services tax (GST) purposes. Instead, cryptocurrencies are considered “a form of `intangible property`” under the GST act and regulations. Last week, the Australian government introduced Treasury Laws Amendment (2017 Measures No. 6) Bill 2017 — which exempts the purchase of bitcoin and other cryptocurrency as taxable supplies, removing double taxation when the currency is used to buy a taxable supply.
The so-called “double taxation” issue has vexed the nascent bitcoin business community in Australia, and the government has indicated it is willing to help in efforts to foster the digital space. Previously, consumers using digital currency were subjected to sales taxes upon purchase of the digital currency and then again on any use for purchase of goods and/or services.
In its budget summary for 2017-18, the Australian government revealed plans to make sure that the general sales tax (GST) was not paid twice. “From 1 July 2017, purchases of digital currency will no longer be subject to the GST, allowing digital currencies to be treated just like money for GST purposes. Currently, consumers who use digital currencies can effectively bear GST twice: once on the purchase of the digital currency and once again on its use in exchange for other goods and services subject to the GST.”
The move should help spur investment in the country. Several businesses left Australia in 2014 following the double-taxation imposition.
Treasurer Scott Morrison said that the measure was framed as part of a wider effort to promote financial technologies in Australia.
“The Turnbull Government has provided strong support for the FinTech industry – allowing tax concessions to encourage investments in early-stage start-ups, legislating a crowd-sourced equity funding regime, announcing measures to encourage new challenger banks as well as creating a regulatory sandbox which encourages businesses to test innovative financial services without facing the costs of regulatory licensing,” said Morrison.