Tag Archives: Bitcoin Taxation

Baby Steps Forward For Bitcoin In Australia

Baby Steps Forward For Bitcoin In Australia

This week the Australian Senate Economics References Committee released its report in to digital currency‘Digital currency—game changer or bit player’ (yes, I kid you not, that’s the name of the report).

Most media commentary regarding the report has centred around the committee’s recommendation to modify the Australian Goods and Services Tax (GST) Act to recognise digital currency as ‘money’. In effect, this would mean that bitcoin transactions would not attract GST in Australia – removing the current ‘double GST’ on a variety of bitcoin transactions.

Obviously, this recommendation has been welcomed by the Australian bitcoin community. However, it’s worth keeping in mind that to action these changes for Australian law purposes is not a trivial task. Practically, it requires agreement from every state and a Federal government to actually drive the amendment – given the current size of the industry this seems unlikely. So although this is a great basis for further conversations with government, there is no practical impact for bitcoin startups in Australia – just yet.

As with reports similar to this one (see for example the Canadian inquiry report), it shows that many within the highest ranks of government see the importance of innovation in the financial services sector. With ‘software eating the world’ banks are looking less and less likely to drive this change. This means that startups need to lead the way.

To allow this to happen in the digital currency space, a legal framework that provides a welcoming environment for innovation to thrive in is required. This report hopefully provides a step in this direction for the Australian Bitcoin industry.

 


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Chatting About All Things Bitcoin

A few weeks back I did a ‘blab’ with Suzanne Nguyen (@stringstory) about all things Bitcoin. Check it out and let me know what you think.

 


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Bitcoin Is Not A Movement. It’s An Application Stack

Bitcoin Is Not A Movement. It’s An Application Stack

For some reason I tend to be a libertarian magnet. Every time I speak at a Bitcoin event I’m always approached by all the crazy libertarians in the room. In the main, they ask polite questions about where the world of Bitcoin is headed and what the legal landscape might look like in the coming years for Bitcoin. However, there always comes an uncomfortable moment where the question of the Bitcoin ‘movement’ is raised. You know the “Bitcoin is going to bring down governments” and “I use Bitcoin because the government can’t take it from me” comments – if you haven’t heard either of these you haven’t been to enough Bitcoin related events.

I can see why people think I might buy into this view of the world. I’m incredibly bullish on b/Bitcoin. On both fronts, I believe it’ll have a profound impact on the way a number of industries are organised – everything from the law to the way machines interact with each other. However, emphatically, I don’t believe in the ‘movement’.

I don’t think governments will topple (I think they’ll embrace it), I don’t think banks are at risk of being displaced (I think they’ll be the biggest adopters of Bitcoin/blockchain), I don’t think you’ll see it become the world’s reserve currency ( I think it’ll do for internet commerce what Paypal initially did – but at even larger scale).

Put simply, Bitcoin is not a movement. It’s an application stack. To use an oft quoted line (or in internet speak, a meme), it’s the “TCP/IP of value”.

Take solace my libertarian friends, Bitcoin is going to be massive – but just not in a ‘the global financial apocalypse is coming and I’m insulated by owning bitcoin’ kind of way. It’ll be a movement like the internet was a ‘movement’. It’ll functionally change the way we move value in the online age. However, no government will be brought down by the tidal wave of Bitcoin. It’ll simply ride the wave.

So if you see me at a conference or a meetup come over and chat. I love hearing views on where the hell Bitcoin is headed and how it’ll change the world. But just so you know, I don’t think bitcoin is going to bring down ‘our corrupt capitalist governments’ – I just think it’ll redefine how the world transfers value. Hopefully that’s enough of a ‘movement’.


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Talking Bitcoin News On CryptoGoss

This week I sat down and had a chat with the team at CryptoGoss about what’s happening in the world of Bitcoin and Blockchain. Listen in and let me know what you think in the comments below.


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Some Thoughts On The ATO’s Bitcoin Guidance

Some Thoughts On The ATO’s Bitcoin Guidance

Earlier today the Australian Taxation Office (ATO) released its much anticipated guidance on the taxation treatment of bitcoin. Along with the guidance paper they released a slew of draft rulings.

In their media release the ATO stated that:

“[We have] consulted extensively with bitcoin experts, businesses, industry bodies and other external stakeholders to develop this guidance and explain the obligations of bitcoin users.”

Reading the guidance (and more so the draft rulings) it is clear that they have invested a fair amount of time in understanding what bitcoin is and how it’s being used. In many ways the ATO has released a very complete picture of how they see bitcoin for tax purposes.

Although many have been quick to find fault with the guidance provided by the ATO, the truth is that they have provided a great deal of clarity to businesses and consumers. Further, the depth of analysis provided by the rulings released today gives a solid grounding to the ATO’s view – which is more than what’s been issued by other tax authorities.

Some Important Points To Note

The guidance paper that was released by the ATO contains very little ‘meat’ and should be taken for what it is – a general guidance paper. Much of the interesting content is actually contained in the draft rulings that accompanied the guidance paper. For the most part, this is where lawyers and accountants will be spending their time over the next few days.

Having said this, it should be noted that the rulings released by the ATO are all still in draft form and still under consultation. This means that those who wish to engage with ATO can still do so.

ATO Delays Position On Bitcoin – But Does Offer Some Guidance Via Private Binding Ruling

ATO Delays Position On Bitcoin – But Does Offer Some Guidance Via Private Binding Ruling


This article does not constitute legal, accounting or tax advice. Any tax-related opinions in any part of this article are not tax advice, and were not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding tax penalties or for promoting, marketing, or recommending to another party any transaction or matter addressed herein. Everyone should seek the advice of a competent, independent tax professional regarding their particular circumstances.

I make no claims, promises, or warranties about the accuracy of the information provided in this article. Tax advice cannot be provided on a general basis, and must be specifically tailored for each individual by their particular representative. Everything included in this article is the author’s opinion and not a concrete fact.


Yesterday, it was reported that the Australian Taxation Office (ATO) would be delaying its long awaited position paper on bitcoin until after they’d received advice from the Solicitor-General, Justin Gleeson SC.

Understandably, many in the bitcoin community feel that the ATO has been dragging its feet on providing guidance. Further, given that the process of receiving advice from the Solicitor-General can take months, many may end up being caught in limbo come income tax return lodgement time. Which could be a much bigger issue.

Does An ATO View Exist?

There have been murmurings that the ATO has in fact granted private binding rulings to a few taxpayers in relation to the tax treatment of bitcoin. In fact, CoinDesk reported in March that an ‘Australian bitcoin entrepreneur’ had received a ruling from the ATO regarding the taxation treatment of bitcoin. According to the article, the ruling suggested that bitcoin would (i) be subject to Goods and Services Tax (GST) and (ii) would be taxable on revenue or capital account depending on the activities related to the disposal and acquisition of the bitcoins. In other words, bitcoin would sit squarely in the middle of the Australian tax net (see HERE for the article).

However, this ruling hasn’t been made public via the ATO’s Private Binding Rulings Register (or it may have been removed), which does cast some doubt as to whether it has been finalised. In fact, up until recently there were no rulings which had been published by the ATO on the topic of bitcoin.

However, this changed a few days ago.