Australian Tax Office Bitcoin Guidelines a 'Disappointment'; Virtual Currency Not Treated As Money
By Reissa Su | August 22, 2014 9:16 AM EST
The Australian Tax Office, or ATO, has released its guidelines regarding the treatment of cryptocurrency Bitcoin. The ATO has ruled it will not treat Bitcoin as "cash" but only property. In the report about the tax treatment on Bitcoin, ATO said it is "neither money nor a foreign currency."
Some of Bitcoin enthusiast Mike Caldwell's coins are pictured at his office in Sandy, Utah, September 17, 2013.
For capital gains tax purposes, Bitcoin will be treated as an asset. The ATO views Bitcoin supply as not the same as the financial supply for goods and services.
Reports said the guidelines for the treatment of Bitcoin had disappointed Bitcoin Association of Australia President Jason Williams. He said Bitcoin was clearly being used as money since some websites allow the digital currency as payment. Williams is convinced Bitcoin should be taxed in the same way as traditional money.
Williams said if ATO will only apply double GST to some transactions of Bitcoin, it will adversely affect Bitcoin-related investments. He feared Bitcoin businesses may move to other regions with more favourable tax conditions.
Williams said the rate of Bitcoin adoption will most likely be affected by the ATO guidelines. If a consumer buys $100 worth of Bitcoins and the exchange charges a fee of 10 per cent of the transaction, a tax will also be levied on the entire $100 amount. He believes the new ruling will only burden consumers.
According to statistics, there are more than 170 businesses in Australia that accept Bitcoin as payment. Most them are located in NSW and Victoria, reports said.
Start-up company Living Room of Satoshi co-founder Daniel Alexiuc said the Bitcoin adoption rate in Australia continues to grow rapidly with customers looking for more ways to spend their digital currency. His company allows customers to pay their bills with Bitcoin. Alexuic said that in the last three months, the company has processed household bills worth $150,000.
Ron Tucker of the Australian Digital Currency Commerce Association said the ATO guidelines were "impractical" and went against the international Bitcoin legislation. Tucker said Bitcoin has surpassed Western Union based on global daily transactions. He predicted that the cryptocurrency may soon take over PayPal.
In one of the ATO guidelines, people who use Bitcoin to buy goods and services for personal use. The capital gain or loss from the Bitcoin transaction will be viewed as a personal use asset if the cost does not exceed $10,000.
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