22 Dec 2014
The Guardian: Bitcoin hit with tax blow in Australia – CoinDesk
FXStreet (Barcelona) - CoinDesk Analysts note the Guardian shares the Australian tax authority’s ruling that Bitcoin transactions are subject to goods and services (GST) tax, suggesting that the cryptocurrency is not likely to be classed as ‘money’ in the near future.
Key Quotes
“Australia’s tax authorities have ruled that bitcoin transactions are subject to the goods and services tax (GST), suggesting that the cryptocurrency is not likely to be classed as “money” in the near future.”
“The ruling mainly applies to Australian businesses running bitcoin exchanges, which let customers trade real money for the digital currency. The decision means that when bitcoin is bought from an exchange, it will have to pay GST on the supply of bitcoin.”
“GST does not usually apply to financial transactions, meaning that a conventional money exchange does not have to charge the tax when Australians buy foreign currency.”
““A transfer of bitcoin from one entity to another is a ‘supply’ for GST purposes,” the Australian Tax Office said. “The exclusion from the definition of supply for supplies of money does not apply to bitcoin because bitcoin is not ‘money’ for the purposes of the GST Act”.”
“The tax will make running a bitcoin exchange in Australia an expensive proposition, because it is due on the total amount of bitcoin supplied, rather than on the cut the exchange takes above the market value.”
“The office’s rationale for treating bitcoin in this way is that “bitcoin is not a legally recognised universal means of exchange and form of payment by the laws of Australia or the laws of any other country. Therefore, it is not ‘currency (whether of Australia or of any other country)’ under paragraph (a) of the definition of ‘money’”.”
Key Quotes
“Australia’s tax authorities have ruled that bitcoin transactions are subject to the goods and services tax (GST), suggesting that the cryptocurrency is not likely to be classed as “money” in the near future.”
“The ruling mainly applies to Australian businesses running bitcoin exchanges, which let customers trade real money for the digital currency. The decision means that when bitcoin is bought from an exchange, it will have to pay GST on the supply of bitcoin.”
“GST does not usually apply to financial transactions, meaning that a conventional money exchange does not have to charge the tax when Australians buy foreign currency.”
““A transfer of bitcoin from one entity to another is a ‘supply’ for GST purposes,” the Australian Tax Office said. “The exclusion from the definition of supply for supplies of money does not apply to bitcoin because bitcoin is not ‘money’ for the purposes of the GST Act”.”
“The tax will make running a bitcoin exchange in Australia an expensive proposition, because it is due on the total amount of bitcoin supplied, rather than on the cut the exchange takes above the market value.”
“The office’s rationale for treating bitcoin in this way is that “bitcoin is not a legally recognised universal means of exchange and form of payment by the laws of Australia or the laws of any other country. Therefore, it is not ‘currency (whether of Australia or of any other country)’ under paragraph (a) of the definition of ‘money’”.”