A new inquiry from the Australian government is looking to change current tax codes for Bitcoin in Australia, which are proving to be controversial and counter-productive, hurting businesses and growth. The initiative seeks to establish similar progressive standards as in nations like the UK, Canada, and Singapore, where Bitcoin is considered money.
‘A positive step’
Bitcoin regulation has been, and will continue to be, a hot topic as it continues to gain momentum and interest in personal and corporate finance, worldwide. This issue has been a main focus of the Australian Senate over the past year, as bitcoin is becoming an increasingly popular commodity in the Oceanic country.
It is attracting business to the nation, and bitcoin ownership in Australia is among the world’s highest per capital, with 7% of the world’s bitcoin circulation running through the continent nation.
The problem recently has come with the addition of the GST, or Goods and Service Tax, levied on Bitcoin transaction by Australia’s Taxation Office last year. This labeled Bitcoin an “intangible asset” causing a double-taxation effect for Bitcoin businesses.
Coinjar recently moved their operations from Australia to the UK due to the effect of these new regulations. The United Kingdom has excluded bitcoin from VAT (Value Added Tax), which has attracted many companies, with London becoming a global hub for Bitcoin business activity.
Coinjar CEO Asher Tan told IBTimes:
“If it is defined as a global currency, this would be a positive step to encouraging the bitcoin market to continue innovating. The Australian bitcoin market will significantly improve.”
Removing the GST
Primarily, the current GST levy causes Bitcoin users to pay a tax when they buy the digital currency initially, and pay another tax when they make a purchase with the currency. These recommended revisions, expected officially next week, would simplify the tax code for users and businesses dealing in the currency, hence making it more attractive, overall.
“The opportunities for trade, investment, high salaries and world-leading skills are far more important [than any potential loss of revenue], and I urge the states to work with the Commonwealth to make what amounts to simple change,” Labor Senator Sam Dastyari, told the Australian Financial Review. “Without a doubt, the main benefit will be the confidence and certainty that removing a GST will provide to our own digital entrepreneurs, and the foreign businesses who want to set up here. The Treasury ministers need to work with the states to make the changes necessary to bring our legislation into the 21st century.”
Cash still king?
One unfortunate downside is the alleged threat of money laundering and terrorism financing. This potential will be mitigated by all Bitcoin and digital currency companies having to catalog all users through the Australian Transaction Reports and Analysis Center. This will make it easier for Bitcoin businesses to “better identify and mitigate money laundering and terrorism financing risks in the conduct of their transactions.”
Given these developments and the risk of losing business investment is forcing Australia’s hand. While they can lead, follow or get out of the way, Australia appears to have chosen to follow, though it is encouraging that they are betting on Bitcoin’s economic benefits moving forward.
Unfortunately, all Australians who use bitcoin being treated like a potential criminal is baked into the cake by the authorities. Interestingly, similar measures are not taken when using Australian dollars for any transaction, underscoring the inherent freedom and benefits of using cash as an option. It appears freedom from persecution and bitcoin cannot seem to get on the same page in The Land Down Under.