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As Bitcoin Price Hits Record Highs, Australia’s Government Considers Digital Currencies and Tax Implications

Last Updated March 4, 2021 5:00 PM
Rebecca Campbell
Last Updated March 4, 2021 5:00 PM

As bitcoin’s valued soared to record heights over the weekend, the Australian government heard evidence on digital currencies and its tax implications.

On Saturday, bitcoin’s value saw its value rise to $6,200 for the first time, pushing its market cap to $102.8 billion. With investor interest increasing in the cryptocurrency market, governments are turning their attention to the impact it presents.

One of which is Australian’s House of Representatives Standing Committee on Tax and Revenue.

Speaking to the Sydney Morning Herald , Kevin Hogan, the member for the Division of Page in NSW and chair of the committee, said that digital currencies would present risks to governments if they remain outside of regulation.

He said:

If people choose to go ‘off the grid’ and it is fully encrypted, that presents challenges.

Of course, while there are challenges that governments need to overcome, there are also opportunities too. Hogan believes that if the Tax Office embraces the blockchain, the collection and payments of taxes would be more efficient.

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.

The Chinese government is one authority that is utilising the distributed ledger to collect taxes and issue electronic invoices. In August, it was reported that Chinese authorities have ‘actively’ been exploring the application of the distributed ledger in the ‘fiscal and taxation business.’

This announcement from Australia comes at a time when authorities recently made progress with its anti-money laundering (AML) and counter-terrorism financing (CTF) bill, which included bitcoin exchanges under the remit of Australian legislation for the first time.

Part of a wider reform of the government’s AML and CTF laws, the objective is to provide more power to the Australian Transactions and Reporting Analysis Centre (AUSTRAC), the country’s financial intelligence agency and watchdog. It’s believed that the bill will be passed.

Last week, David McKay, the Royal Bank of Canada’s CEO, said that while he would never call bitcoin a fraud, he does have concerns with it.

In a report, he said:

There are some real concerns about how the bitcoin is being used that we have to resolve.

In the past, Jamie Dimon, CEO of JPMorgan Chase, has called bitcoin is ‘a fraud,’ claiming that it’s ‘worth nothing.’

Featured image from Shutterstock.