With the onset of July 2018, the Australian government would double the tax of any kind of transactions which contains cryptocurrencies such as, Bitcoin. As per the existing law of December 2014, Australian citizens are taxed doubly for all digital transactions, which is one-time goods and services (GST) tax on all what they pay and purchase. Also, the rule did apply to the digital wallet transactions as well.
Bitcoin – The Intangible Item
As per the Australian Tax Office rules, bitcoin and such other digital wallets are treated as the ‘intangible’ item. For instance, Daniel Alexiuc, the CEO of Australian bitcoin company Living Room of Satoshi, while speaking for CCN in 2016, said that, “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”.
‘Australia’s FinTech Priorities’, the comprehensive policy of Australian Treasury did commit for doubling the existing taxes earliest by 2016. As per the official statement of the Australian Treasury, “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”.
Now, by the beginning of 2017, in order to fulfill the promise, the Australian government tried to include the issue in its federal budget. Eventually, in the last September, a Bill was tabled in the parliament for passing the same to make an end to the double taxation policy in digital wallet payments.
The Australian reports that, the bill has been passed now with the initiative of the Australian parliament, by making the bitcoin and digital currencies as a ‘foreign currency’ under the provisions of GST taxation policy.
The passing of such a bill is a welcome move as it tries to stimulate the usage of digital wallet payments in Australia. As part of that, now the Australia’s Tax Office is looking forward to focusing the root cause responsible for the increased usage of cryptocurrencies. Even they are also planning for including blockchain technology to channelize the tax policies for its betterment.
The Chair of Australia’s House of Representatives Standing Committee on Tax and Revenue, in New South Wales, Mr. Kevin Hogan did speak up last week as, “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.”
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