[LINK] Bitcoin .. ATO's draft guidance
stephenloosley at outlook.com
Thu Aug 21 22:32:35 AEST 2014
ATO set to apply GST and capital gains tax to Bitcoin
By Brian Karlovsky on 21 August, 2014
The Australian Tax Office is set to apply GST and capital gains tax to bitcoin in its first move to tax the digital currency.
The ATO does not deem bitcoin as a currency but has confirmed that bitcoin is a legitimate asset for CGT purposes, according to the ATO's long awaited guidance on bitcoin.
"Transacting with bitcoins is akin to a barter arrangement, with similar tax consequences," the guidance statement said. "The ATO’s view is that bitcoin is neither money nor a foreign currency, and the supply of bitcoin is not a financial supply for goods and services tax (GST) purposes. Bitcoin is, however, an asset for capital gains tax [CGT] purposes."
This mean GST could apply to both the goods and services being supplied, and to the ‘supply’ of bitcoins as payment.
Australian Digital Currency Commerce Association chairman, Ronald Tucker, said it was the beginning, rather than the end of discussions on this issue and that ADCCA looked forward to a continuing dialogue with the ATO on how to create a taxation regime that ensured the emerging digital currency industry could thrive and prosper in Australia. “On the positive front the ATO has confirmed that bitcoin is a legitimate asset for CGT purposes, and is not some digital fancy," he said.
"This also means that consumers can confidently purchase goods or services with bitcoins for personal consumption, with no adverse tax implications up to the value of $10,000."
He said any goods or services sold in Australia would of course, as expected, still attract GST just like a transaction conducted in Australian dollars.
"The use of bitcoin to pay for goods or services is no different than Australian dollars in this respect, other than of course the convenience provided by digital currency," he said. “The ATO’s paper has, unfortunately, taken the position to treat the supply of Bitcoins the same way as an exchange of a commodity; something that would involve the costly and impractical imposition of GST on the supply of bitcoins."
Tucker said bitcoin by its very nature is used as a currency and a store of value and we believe it should be treated by the ATO in the same way as other financial inputs such as foreign exchange. “It is notable that other jurisdictions with similar tax systems to Australia, such as the UK, have rejected the view taken by the ATO’s guidance paper, with the purchase of bitcoins not attracting UK VAT.
He said the digital currency industry in Australia was a hotbed of innovation and entrepreneurship and had the potential to make the country a regional, if not global leader in financial services.
“This potential, however, could easily be undermined by an uncompetitive and unworkable tax regime that sends the industry offshore to other countries such as Singapore and Hong Kong, where of course Australian GST does not apply.
The ATO’s draft guidance – which is not yet legally binding – is expected to kick off an extensive round of consultation with the digital currency industry.
More information about the Link