Australia’s Law to end Bitcoin’s Double Taxation Stalled
Last year, the Australian Treasurer Scott Morrison promised to act swiftly on the change of the GST, in order to end the double taxation of bitcoin and other digital currencies. However, more than fourteen months have passed without any legislative progress. Now, the issue is no longer a priority and bitcoin continues to support GST twice in Australia.
The Australian Tax Office (ATO) currently does not consider bitcoin and other digital currency money for GST purposes. Instead, bitcoin is considered a form of intangible property under the law and GST regulations.
Consumers who use bitcoin to pay for other goods and services are effectively “taking GST twice,” the government describes. Bitcoin users are taxed when purchasing the digital currency, and again when using it to buy goods and services.
The government began working with the Fintech industry in March 2016 to reform the GST law, with the goal of halting the double bitcoin GST treatment. One solution discussed was to define the digital currency as money under the GST law, which the government accepted.
The Australian Fintech Industry Association, Fintech Australia, provides input into the development of the government’s innovation agenda. Through the partnership, the Fintech community collaborated and drafted a document of recommended reforms. Earlier last year, the group identified the GST tax change as a key reform priority. Treasurer Morrison said he would act quickly and promised a bill.
A discussion paper was published in May describing the proposed change. After this document, the government received fourteen comments, all in favor of amending the GST law to define bitcoin as money.
More than fourteen months have passed without any legislative progress. Fintech Australia CEO Danielle Szetho told Innovationaus.com this week that the Fintech community is still waiting impatiently for the bill that Morrison promised. However, so far, no further movement has been made. “By all accounts the government is still committed to act on the issue, but it is far from a priority”, the publication wrote.
Szetho also pointed out that changing Bitcoin’s definition is “one of the original priorities we put in the reform paper and one they said yes to. But here we are, 14 months on and still nothing.” Asserting how this act is “a very technical piece of work which no-one could argue with”, she claims “it could be put through Parliament very quickly”.On the other hand it describes:
“We’ve been told that it is going through but it needs to be prioritised on the agenda, but it just hasn’t. They’re working on it but something else just keeps coming up. We’re a bit disappointed with the delay.”
The longer the government takes to amend the GST law, the further Australia falls behind other countries. The European Union had decided back in October 2015 that digital currencies are not to be doubled taxed. The UK also has had a similar policy in place since March 2014. Japan has recently started considering bitcoin a method of payment as well as abolishing consumption tax on acquiring bitcoin. Szetho said:
“Australians are early adopters, but the uptake has been limited because no-one is certain about how they might be taxed. It has slowed the adoption of these new currencies in Australia.”
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