In its written submission to the inquiry, the tax
office indicated that most of the submissions it
received in response to its draft bitcoin ruling had
generally been in favour of treating it as a
currency for income tax and GST purposes, and as a
financial supply for GST purposes when it is
converted to Australian dollars.
"Whether bitcoin or other crypto-currencies should
be treated as ‘money’ or ‘currency’ is a question of
policy," the ATO said.
"The committee considers that the most immediate
concern for Australian digital currency businesses
is the current GST treatment of digital currencies,"
the Senate inquiry's report states.
"The committee is of the view that digital currency
should be treated as money for the purposes of the
goods and services tax," the report argues.
Evidence from the ATO during the inquiry was that
changing the tax treatment of digital currencies
would require amendments to both GST legislation and
regulations.
"As such, the committee recommends that the
government consults with the states and territories
to consider amending the definition of money in the
A New Tax System (Goods and Services Tax) Act 1999
and including digital currency in the definition of
financial supply in A New Tax System (Goods and
Services Tax) Regulations 1999," the report states.
The current treatment of bitcoin "has placed an
additional burden on Australian digital currency
businesses," the report argues.
Bitcoin advocates that appeared at the inquiry's
public hearings called for the GST treatment of the
currency to be changed.
Some Australian bitcoin-based businesses have
already closed down or relocated overseas, according
to the Australian Digital Currency Commerce
Association (ADCCA). The report's recommendation
flies in the face of arguments made by Treasury
officials before the committee.
Treasury has been monitoring the use of bitcoin in
Australia both from a regulatory perspective and a
tax perspective.
"I think we will continue to assess the environment,
but I would stress that it is an industry in its
infancy, so I think to jump in and suggest that
there should be changes to the tax law to
accommodate it is a little bit early in that
process," Kate Preston, general manager of the
Treasury's Small Business Tax Division, said at a
hearing of the inquiry earlier this year.
Today's
report also recommends further analysis on whether
digital currencies such as bitcoin should be as akin
to foreign currencies for the purposes of income tax
and fringe benefits. "The committee recommends that
further examination of appropriate tax treatment of
digital currencies should be included in the
[federal government's] taxation white paper process,
with particular regard to income tax and fringe
benefits tax," the report states. In terms of
regulation for business involved the digital
currency industry, the report noted concerns raised
in evidence submitted to the inquiry about the
impact that over-regulation could have on the
nascent bitcoin sector.
"As the digital currency industry is still in its
early stages, the committee supports a
'wait-and-see' approach to government regulation,"
the report states.
"The committee believes that the relevant government
agencies should closely monitor the development of
the digital currency industry in Australia, and
conduct further research to determine the actual
risks and opportunities presented by different types
of digital currency businesses, for example Bitcoin
exchanges and ATMs, or payment facilities."
However, the inquiry did back the Attorney-General's
Departments statutory review into Australia's
anti-money laundering and counter-terrorism
financing laws, which is considering whether digital
currency businesses should be part of Australia's
AML/CTF regime.
Australia's anti-money laundering watchdog, AUSTRAC,
has examined the potential use of digital currencies
in money laundering. Late last year the Australian
Crime Commission revealed the existence of an
operation to monitor the use of digital currencies,
including bitcoin, by criminals.
Today's report also recommended the government
consider setting up a 'Digital Economy Taskforce' in
order to "gather further information on the uses,
opportunities and risks associated with digital
currencies". "This will enable regulators, such as
the Reserve Bank of Australia and ASIC, to monitor
and determine if and when it may be appropriate to
regulate certain digital currency businesses," the
report states.
"In the meantime, the committee supports ADCCA's
continued development of a self-regulation model, in
consultation with government agencies."
Source::
The Sydney Morning Herald , dated 04/08/2015. |