Australia’s 2017 federal budget is putting an end to the double taxation of cryptocurrencies like bitcoin as part of a much wider FinTech forward agenda by the authorities. The double taxation of cryptocurrency related transactions in Australia has shuttered promising startups and annoyed the FinTech community through the years. The cryptocurrency is seen as intangible assets instead of a money tool under current legal guidelines that dictate a double tax on payments based on cryptocurrecy.
Daniel Alexiuc, CEO of Brisbane-based bitcoin startup Living Room of Satoshi, said:
“The Australian Taxation office’s original ruling, ostensibly the valid interpretation of current legal guidelines, led to a double tax on bitcoin. For example, if you pay $4 in bitcoin for an espresso, you’ll pay 40c for goods and services tax for the espresso, and 40c once more for the bitcoin you used to pay for the espresso.”
The Australian Taxation office’s view is that Bitcoin is neither cash nor a foreign currency, and the supply of bitcoin is not an economic supply for goods and services tax functions, as stated the policy, which was last time updated in December 2014. That legislative stance is about to modify. A complete 12 months after revealing its purpose to exempt the double taxation of cryptocurrencies throughout its 2016 budget, the Australian authorities Treasury is at long remaining implementing regulation to remove the double goods and services tax.
In its statement, the Australian Treasury wrote:
“From 1 July 2017, purchases of cryptocurrency will not be issue to for goods and services tax, permitting cryptocurrencies to be handled similar to money for goods and services tax purposes. The authorities will make it less difficult for revolutionary cryptocurrency organizations to function in Australia.”
Bitcoin usage is gaining traction in Australia and that increase is positive to get a boost in July as cryptocurrency transactions become less expensive and gain parity with fiat cash transactions.