Bitcoin.com recently reported that Australia’s government was planning to end the double taxation of bitcoin and increase fintech research and development within the country. In a recent budget report published on May 10, Australian authorities have revealed they will end the double taxation of virtual currencies July 1st as leaders plan to position “Australia to be a world-leader in fintech.”
Australia is looking to embrace financial technology and digital currencies according to the country’s 2017-2018 budget report. The report details that Australia is committed to becoming a global technology leader and the budget package aims to position the local industry. As far as bitcoin is concerned the government has decided to amend the country’s goods and services tax (GST) law to end digital currency double taxation.
“The Government will make it easier for new innovative digital currency businesses to operate in Australia. From 1 July 2017, purchases of digital currency will no longer be subject to the GST, allowing digital currencies to be treated just like money for GST purposes,” explains the budget report. “Currently, consumers who use digital currencies can effectively bear GST twice: once on the purchase of the digital currency and once again on its use in exchange for other goods and services subject to the GST.”
The Australian bitcoin community is sure to welcome the new changes after being subject to capital gains and fringe benefits tax since July of 2014. A year later in August of 2015, a Senate inquiry revealed leaders wanted to overturn the Australian Taxation Office (ATO) ruling and began working on amending the tax guidelines. At the time Senator Sam Dastyari believed the states and the Commonwealth should reconsider the ATO’s decision to classify digital currencies as “intangible assets” and treat bitcoin as a regular currency.
Australia’s “Backing innovation and fintech” budget report also explains new businesses are encouraged to join a regulated fintech sandbox that can help early startup funding. Furthermore, the government has introduced new tax incentives for qualifying fintech start-ups and early stage innovation companies (ESIC). The report explains amending the digital currency taxation statutes will enhance innovation between consumers and Australian businesses.
The 2017-2018 budget statutes also give a detailed explanation of how digital currency taxation will work after July 1. The report goes on to describe a person buying a video game with bitcoin and how taxation applies to that particular type of transaction. Under the new measure, the person’s original purchase of digital currency will no longer be subject to GST providing the same outcome if the individual used Australian dollars.
Bitcoin has been steadily growing popular in Australia for quite some time. The country now has 13 bitcoin ATMs and a few exchanges and brokerage services like Coinjar, Bit Trade Australia, and Coin Loft. Alongside this, Localbitcoins volumes in Australia have been rising exponentially this year. The country also has an Australian Digital Currency Commerce Association (ADCCA) and many more cryptocurrency businesses and advocates within the region. The ADCCA also submitted a letter to the treasury in order to help bolster amending the GST law introduced in 2014.
“The ADCCA urges the Australian Government to quickly move to make the amendments necessary,” the organization stated.
With the new GST guidelines implemented July 1 leaders hope to encourage more digital currency and fintech growth within the country, according to the budget report.
What do you think about Australia changing the GST guidelines this summer? Let us know in the comments below.
Images via Shutterstock, Bitcoin.com, and Pixabay.
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