Come July 2018, Australia will (finally) remove the double taxation of transactions involving cryptocurrencies like bitcoin.
Under current law mandated in December 2014, Australians are taxed twice for digital currency transactions – once for the goods and services (GST) tax on the purchase and again for the digital currency used in the transaction. Bitcoin and other digital currencies are seen as an ‘intangible’ property under rules mandated by the Australian Tax Office.
“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.
In a comprehensive policy of ‘Australia’s FinTech Priorities’, the Australian Treasury pledged to commit the controversial double taxation in early 2016. “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 Australian Treasury wrote in a statement.
Earlier this year, the government kept good on its word by addressing the issue in this year’s federal budget.
In September, the government introduced the bill to set the path for legislation that will put an end to the double taxation of digital currencies. As reported by the Australian , that bill has now passed through the Australian parliament with bitcoin and digital currencies now seen as a ‘foreign currency’ under applicable GST treatment.
The move is certain to boost the adoption and usage of digital currencies in the country. Australia’s Tax Office is also looking at addressing the growth of cryptocurrencies and even adopting blockchain technology to streamline the taxation process.
Kevin Hogan, chair of Australia’s House of Representatives Standing Committee on Tax and Revenue in New South Wales stated this week:
If these cryptocurrencies emerge in greater numbers, certainly the government will need to adapt to some of that to make sure that the tax payment system is included in that.
Featured image of Australian Parliament House from Shutterstock.