Cryptocurrency users in Australia can be happy with the way things are turning out for them. Why? It has been arguably a honoured promise, for the Australian government, to do away with the duo taxation of the virtual currencies such as bitcoin.
In Australia, there has been a trend whereby, adopters of virtual money, have to pay the tax twice in case they use their digital currency. This is how it works: tax is levied on goods and services one is purchasing and the other part on the virtual money being used to pay for the order.
For example, if you need to pay $5 for a cup of tea using bitcoin, you will be required to pay 50c GST for the cup of tea and a further 50c for the digital currency, in this case, bitcoin, you used to purchase that cup of tea. GST is the short form for goods and services tax. That was what Daniel Alexiuc, the CEO of the Living Room of Satoshi which is an Australian bitcoin startup, was trying to explain when he spoke to the CCN in 2016.
During the same year in March, the Australian government comes forward to say how committed it was to the removal of the infamous double taxation practice in relation to the use of cryptocurrencies. A year later, no changes have been made concerning that legislation. Why? Because the Australian tax office still viewed bitcoin as an ‘intangible’ property.
Australia’s FinTech community criticized the delay saying it was an ‘outdated’ approach being used to tax digital money by the government. According to collective FinTech Australia and the CEO of the industry lobby group, Danielle Szetho, it was amongst the original priorities they had put on their reform paper which the government said it was okay with it in April 2017. They even went on to say how frustrated they were because, by the 14th month, nothing concrete had been done yet.
In the subsequent month, virtual money, at last, gained the much-awaited tax cut in the current financial year. For the most part, this was a wider friendly agenda directed towards the FinTech community.
As at now, things are a bit better. Why? The Australian government has, after a long time, introduced a bill required to push for the removal of the double taxation legislation. According to Scott Morrison, an Australian treasurer, it was a step forward in cementing Australia’s reputation as an international FinTech center.
Morrison, in a statement, wrote that the bill will make sure that Australians are not further charged GST when they buy virtual money. That allows it to be put in the same class as the physical currency for GST commitments. The new law change will apply starting from 1st July this year in line with the recent 2017 budget announcement.
As things stand right now, the bill will require going through the parliament for endorsement before being delegated as a national law. There are no details released as to when the legislation will be discussed according to the report given by the government. Nevertheless, things are likely to get interesting in the local bitcoin industry. This is because of the boost that will be received for those using digital currency to do transactions when the bill is passed. The end result: the virtual currency, Bitcoin will gain parity with physical currency.