On 20 August 2014 the Australian Taxation Office (ATO) provided a number of rulings on ‘Bitcoin’.
What is Bitcoin?
Essentially, Bitcoin is a digital currency used online as a method for payment. It is not physically printed, and it is not controlled by any banks.
Unlike conventional currency that is based on gold or silver, Bitcoin is based on mathematics which can be freely calculated through available software.
What is the ATO’s view of Bitcoin?
The ATO in its ruling has expressed that it does not view Bitcoin as a foreign currency. However, the ATO does view Bitcoin as ‘property’, which therefore opens Bitcoin up to a number of tax consequences.
What has the ATO ruled about Bitcoin?
The ATO has provided a series of rulings in relation to the use of Bitcoin, which provide guidance for those using Bitcoin. Some of the areas which are impacted include:
- Goods and services tax (GST) implications;
- Capital gains tax (CGT) implications; and
- Fringe benefit tax implications (where businesses are using Bitcoin to pay employee salaries).
Is your business using Bitcoin in Australia?
If your business is using Bitcoin in Australia, it is imperative that you are aware of the additional obligations that have now been placed on Bitcoin compliance.
In its recent rulings the ATO has stated that it views Bitcoin as a taxable supply, which means it is subject to GST.
If your business is:
- using Bitcoin in any exchange transactions;
- accepting Bitcoin in exchange for goods or services; or
- using an agent/intermediary in exchange for goods or services,
it is imperative that your business model and strategy takes into account the ATO’s recent rulings on Bitcoin.
The profile of Bitcoin is rising very quickly, especially with the announcement on 23 October 2014 in the Sydney Morning Herald that Bitcoin company, Independent Reserve, has launched Australia’s newest exchange for Bitcoin holders.
If you are conducting business in Australia using Bitcoin, and are unsure as to whether you are complying with the ATO’s rulings in relation to Bitcoin, please do not hesitate to contact us.
Tagged in: ATO, ATO bitcoins, ATO ruling on Bitcoin, Australian Tax Office, Bitcoin, bitcoin compliance, bitcoin currency, Bitcoin exchange Australia, Bitcoin in Australia, bitcoin payments, bitcoins, Bitcoins and ATO, bitcoins property, business Bitcoin obligations, capital gains tax, capital gains tax implications, CGT, CGT implications, compliance of bitcoins, conventional currency, currency as bitcoins, digital currency, exchange for bitcoins, foreign currency, fringe benefit tax, fringe benefit tax implications, goods and services tax, GST, GST obligations Bitcoin, Indepent Reserve, online payment, tax consequences, tax implications, using Bitcoin in Australia