The Australian government intends to remove the “double tax” treatment from individuals dealing in digital currencies such as bitcoin, reported ZDNet.
In a report titled “Backing Australian Fintech” (available for download from the ZDNet article), the government acknowledged that under the Goods and Services Tax (GST) law, consumers are “double taxed” when using digital currency to purchases anything already subject to GST.
“The government is committed to addressing the ‘double taxation’ of digital currencies and will work with the industry on legislative options to reform the law relating to GST as it is applied to digital currencies,” says the report.
As reported by the Australian Financial Review, Treasurer Scott Morrison said, “We will ensure access to concessional tax treatments for venture capital investments in fintech firms, will take action to prevent the double taxation of digital currencies – we won’t be taxing digital currencies.”
According to the report, there are more than 600 digital currencies available, with different protocols for transaction processing and confirmation, along with different approaches to the increase in the supply of digital currency units. “Removing the ‘double taxation’ treatment for GST on digital currencies and applying adequate anti-money laundering and counter-terrorism financing rules may facilitate further developments or user in the future.”
Last summer, Australia’s Senate Economics References Committee released a report following an inquiry into digital currencies, concluding that they should be treated as real money. The report observed that the double taxation effect placed an additional burden on digital currency businesses in the country.
Image credit – Public domain image (Vector graphics image by Ian Fieggen)