Come 1 July 2017, businesses that transact in Bitcoin will be relieved by a change in the cryptocurrency’s treatment under Australia’s Goods and Services Tax scheme.
The Federal Government has confirmed, in budget papers, that Bitcoin will be treated like a currency and not a good or digital product under GST laws. The consequence is that GST will not need to be applied to Bitcoin sales after 1 July 2017.
Australian businesses had long complained that the application of GST to Bitcoin amounted to “double taxation” for users of the digital currency.
The Turnbull Government has indicated that the changes are prompted by a desire to make Australia more innovation friendly, and pivot the economy towards technology businesses. The Fact Sheet on FinTech, for example, states that:
The Government will make it easier for new innovative digital currency businesses to operate in Australia. From 1 July 2017, purchases of digital currency will no longer be subject to the GST, allowing digital currencies to be treated just like money for GST purposes. Currently, consumers who use digital currencies can effectively bear GST twice: once on the purchase of the digital currency and once again on its use in exchange for other goods and services subject to the GST.
While initially viewed as somewhat of a novelty, Bitcoin has soared to prominence in the last half decade, reaching a high of US$ 2,800 per coin in recent days.
Bitcoin can be used to pay legal fees in Australia, with the firms of Adroit Lawyers and Legal Vision accepting the digital currency for payment of their invoices.