Cryptocurrencies taxation changes clear parliament – Image source: Thomas Sturm/ Flickr
Cryptocurrencies bought by Australian citizens will no longer be liable for goods and services tax (GST) starting with July 1 2018, following a recent change to the tax law. The issue has been on the table since 2014.
Cryptocurrencies will get the same GST treatment as foreign currencies in Australia, after new legislation to stop double taxation cleared parliament, according to the Australian Associated Press.
Under the old legislation enacted in 2014, cryptocurrencies were treated as bartered goods for GST purposes. As a result, they were taxed twice – first when they were bought, and again when they were used on items subject to the GST.
The first clear statement of intent to fix the GST issue for bitcoin and other cryptocurrencies was included in the Senate Economics References Committee Report on Digital Currencies, in August 2015. The report would serve as a rough draft for cryprocurrencies regulation in Australia.
In March 2016, the Australian government announced that it would work closely with the startup community and digital currency industry, and that it would back a legislative solution to tax concerns.
“The Government recognizes that that the current treatment of digital currency under GST law means that consumers are ‘double taxed’ when using digital currency to buy anything already subject to GST. 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.”
“Removing the ‘double taxation’ treatment for GST on digital currencies and applying adequate anti‑money laundering and counter‑terrorism financing rules may facilitate further developments or use in the future,” the government said.
Cryptocurrencies taxation in Australia
Another unsolved issue in regard to cryptocurrencies taxation in Australia is the Fringe Benefits Tax (FBT), payable by employers who remunerate their employees in bitcoin or other digital currencies. The FBT is separate to income tax and is calculated on the taxable value of the fringe benefits provided. This remains a difficulty for cryptocurrency startups and their employees who are forced to resort to multiple crypto/AUD conversions.