Finally, in July 2018 Australia will remove the double taxation of transactions on cryptocurrencies like Bitcoin. However, Australians are taxed twice for digital currency. For both goods and services (GST) tax on the purchase as well as on the cryptocurrency used in the transaction. Since, the rules instructed by the Australian Tax Office, a Bitcoin is seen as an ‘intangible’ property.
Daniel Alexiuc, CEO of Australian bitcoin startup explains,
“If you pay $4 in bitcoin for a coffee, you will pay 40c GST for the coffee. The 40c again for the bitcoin you used to pay for the coffee”.
In a inclusive policy of ‘Australia’s FinTech Priorities’, the Australian Treasury pledged to commit the controversial double taxation in early 2016.
He writes in a statement,
“The Government is committes 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 applies to digital currencies”.
Moreover, to end the double taxation of cryptocurrencies the government popularized the bill to set the path for legislation in September. Reportedly, the Australians says that bill has now passed via the Australian parliament with bitcoin. Therefore, now it has seen as a ‘foreign currency’ under applicable GST treatment.
Certainly, this approach is to enhance the usage and adoption of cryptocurrencies in the country. However, to streamline the taxation process Australia’s Tax Office is addressing the progression of cryptocurrencies. Along with adoption of blockchain technology too.
This week, chair of Australia’s House of Representatives Standing Committee on Tax and Revenue in New South Wales, Kevin Hogan stated that,
“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 includes in that”.