The Australian government has delivered on its longstanding promise to remove the double taxation of transactions involving cryptocurrencies like bitcoin.
For years, digital currency adopters in Australia were taxed twice for transactions, once for the goods and services tax (GST) on the product and again for the GST levied on the digital currency used for the payment.
“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 Australian bitcoin startup Living Room of Satoshi, speaking to CCN.com in 2016.
At the time, the Australian government confirmed it was “committed” to removing the double taxation of digital currencies, in March 2016. A year later, bitcoin was still seen as “intangible” property by the Australian Tax Office with no changes in legislation to put an end to the double taxation. The delay was criticized by Australia’s FinTech community as an “outdated” approach to the taxation of digital currencies by the government. “It’s one of the original priorities we put in the reform paper and one they said yes to,” revealed Danielle Szetho, CEO of the industry lobby group and collective FinTech Australia in April this year. “But here we are, 14 months on and still nothing.”
The following month, digital currencies finally gained that tax cut in this year’s federal budget, as a part of Australia’s wider FinTech-friendly agenda.
Now, the Australian government has – at last – introduced a bill to push the necessary legislation to remove the double taxation of digital currencies. A move described by Australia’s treasurer Scott Morrison as an “action that will further cement Australia’s reputation as a global FinTech center”.
In a statement, Morrison wrote:
The Bill will ensure that Australians are no longer charged GST on purchases of digital currency, allowing it to be treated the same way as physical money for GST purposes. The law change will retrospectively apply from 1 July 2017, in line with the 2017 Budget announcement.
As such, the bill would need to go through parliament for approval before being mandated as national law. The government’s announcement reveals no details as to when the bill will be brought up to go through the due process. Nonetheless, the local bitcoin industry and the wider digital currency ecosystem is certain to get a boost as digital currency transactions become cheaper and gain parity with fiat money transactions.
Featured image from Shutterstock.